Annual Report 2021

Annual Report 2021 | OFX Group Limited a Table of Contents

2 Financial Highlights 3 Operational Highlights 4 From the Chairman 6 From the CEO 8 Executive Team 10 Environmental, Social, Governance 31 Directors’ Report and Financial Statements 103 Independent Auditor’s Report 109 Shareholder Information 111 Corporate Information Human and digital

OFX grew from the idea that there had to be a better, fairer way to move money around the world. That was 20 years ago, and we’re still driven by the same mission today. We believe real help from real people counts, and that’s why we offer our clients the best of both worlds – an easy-to-use digital platform, combined with 24/7 phone access to our currency experts (we call them OFXperts).

Annual Report 2021 | OFX Group Limited 1 Financial Highlights

FY21 Underlying EBITDA $30.4m First half $10.8m Second half $19.6m

FY21 Underlying NPAT $13.5m First half $3.2m Second half $10.3m

Net cash held (as at 31 March 2021) $60.6m

Statutory NPAT $12.8m

2 Annual Report 2021 | OFX Group Limited Operational Highlights

Total transfers (turnover) up 1.4%

Transactions 1.4m

Corporate new revenue up 29.8%

Revenue from existing clients 79%

Net promoter score 68.7

Annual Report 2021 | OFX Group Limited 3 From the Chairman

From the Chairman

Fellow Shareholders,

We continue to operate in a very uncertain world. In this context, our investments, our execution and our culture come under the sharpest scrutiny. I am pleased to share that execution and progress against our strategic priorities remains on track and that the Board and I are very clear that we are building a more valuable Company.

Our industry • The availability of cheap capital has led to a deluge We operate in a global industry – payments – that of new entrants and innovation, which is healthy; is large (estimated to be more than $130 trillion by but capital alone does not win, and the cost of turnover), highly regulated (we are licensed in over 55 capital is unlikely to remain at historic lows forever. different regulatory regimes), and highly fragmented Business models that succeed through the cycle do (we have seen more than 10,000 new entrants in the not rely solely on cheap capital. last five years alone). In addition to all of this, client • Regulators, rightly, are becoming increasingly expectations grow every quarter – they want faster, concerned with business models that do not cheaper, easier payment transfer experiences. have the solid risk management and compliance foundations that are set up to measure, monitor It is tempting against this backdrop to imagine the and address the risks inherent in the transfers only winners will be those who have huge scale, of huge amounts of money. At OFX we have our limitless technology and an endless supply of cheap risk management and compliance regimes tightly capital to compete with. infused throughout our culture, our people and our We don’t subscribe to this view of our industry. In fact, operating mechanisms. our view is that: Executing and creating value • The entire industry is underpinned on trust. To build a valuable Company, management must There are almost no physical exchanges, in fact execute well in the environment they are in and build none across the $25 billion+ in cross-border for the future. It is unacceptable to sacrifice one for the payments that we supported, so clients have to have other, especially in financial services and payments. faith in our technology, our people, our culture, our regulators and our experience in operating through Skander will touch on the trading highlights, but from cycles. Trust has to be earned and it takes time. the Board’s perspective I would highlight a few areas However, you can lose it in hours. that we were particularly focused on. • Whilst we see scale as an advantage, we don’t • Delivering top line growth in our chosen segments, believe it will be a ‘winner-take-all’ industry. We see whilst ensuring it is good quality. The growth in segments, of a sizeable nature, that value a great Corporate, at 11%, was impressive, especially as we digital plus human experience – fast and reliable have not seen the substantial losses some of our but with the opportunity for human interaction competitors saw in this segment. The growth in new if required. Corporate revenue also augurs well for our future • We don’t believe all payments segments will be recurring revenue. commoditised. While some segments, typically low • Delivering a scalable technology platform, that will value segments, certainly will be, there will remain allow us to grow, remain secure, and drive a great large segments where clients appreciate added value client experience. As I mentioned in last year’s features, which is where we’re focusing our offering. letter, we have now invested over $32.3 million in

4 Annual Report 2021 | OFX Group Limited From the Chairman

our technology in the last four years to both deliver what’s needed today, as well as create what’s needed for tomorrow. We executed well in FY21, keeping operating expenses flat despite transactions growth, and delivered an increase in turnover while losses declined. This, along with improved regulator engagement, builds on the strong foundations of the business, strengthening our outlook for the future. This will continue in FY22. • Building and improving a world class team. Over the last year Skander and his team have continued, with the Board’s support, to grow our investment in Learning and Development, in Leadership Development and in attracting high quality professionals.

We firmly believe we have the best team in the industry as a result of these efforts, and it is incredibly encouraging to see the engagement scores, the diverse representation and the unwanted attrition statistics all improving materially.

Naturally we believe we can do better, and we will continue to build on this strong foundation.

Outlook In this financial year we remain committed to the strategy we laid out in FY21. We expect to see industry consolidation as business models grapple with the new realities and players look for scale. We are very supportive of the management team in their efforts to grow Corporate, grow our Online Seller segment and win new Enterprise clients. We are working more closely than ever on our risk management programs, especially in cyber and operational risk, and we expect to see growth in revenue that is delivered in a sustainable way.

I want to thank my fellow Directors for their dedication and commitment when the Company needed it. Whilst we were sorry to lose Lisa Frazier from our Board, we are delighted to welcome Cathy Kovacs to it. Cathy brings a strong industry track record, particularly in Corporate Development and Strategy, as well as a creative and inclusive style.

Finally, on behalf of our clients and our partners, I want to thank the OFX team for their extraordinary hard We have focused on work, skill and perseverance in these uncertain times. building and operating a Last year you created a more valuable Company for our shareholders and for our society. sustainable company that serves our shareholders, our clients, our regulators, and our employees, as well Steven Sargent Chairman as society at large. 18 May 2021 From the CEO From the CEO

Fellow Shareholders,

In FY21, we experienced both the highs and lows of competing in a global payments environment in unprecedented times; but through that, we have emerged stronger, clearer about our competitive advantages, and more resolute in our assessment that we are building a more valuable Company.

Whilst our revenues fluctuated, primarily due to • A substantial total addressable market that we can the uncertainty in global environments causing a grow into. decline in Consumer activity, our strategic pivot to • Value proposition(s) that are difficult to execute Corporate, Online Seller and Enterprise has proved consistently, or replicate. very worthwhile, with each of those segments growing • A strong risk culture that protects clients, shareholders globally in very difficult conditions. That growth has and staff from those who seek to take shortcuts. also been underpinned by substantial improvements in our technology and operations – highlighted by the • A strong, global operating model, led by a team that fact that we processed 1.4 million transactions, an wants to make a difference, and overseen by a Board increase of 26%, whilst holding our operating expenses that has relevant experience and can ask the right flat. Furthermore, we did that against a clear increase questions of management to grow value. in our investment in both technology and commercial • A scalable global platform – both in terms of a strong initiatives (people and marketing). In Corporate alone technical infrastructure and through our operational we are seeing very encouraging signs of progress, with execution, that, when harnessed well, delivers an revenue from Corporate clients up 29.8% – the fastest outstanding client experience. growth in new Corporate revenue in over 10 years. With these in mind, in FY21 we continued to invest Trading highlights and execute in building a more valuable company. For example: • Revenue of $134.2 million, down 2.2%, however within that: • Our investment in Online Sellers, starting in 2016, grew to $2.5 million across people, systems, marketing, – Growth in Corporate revenue of 11% risk and operations. In FY21 we supported $2 billion – Growth in Online Seller revenue of 11% in turnover, and are well represented in every major – North America revenue growth of 5.2% region and marketplace as this segment grows. – Australia and New Zealand revenue growth of 1.4%, • Our value proposition in Corporate continued to be and within that, Corporate revenue growth of 23.8%. refined, and our investment in more marketing, a better • Operating expenses were up by only 0.7%, despite the commercial program and deeper client engagement increase in expenses driving commercial initiatives. delivered 11% growth. • Underlying EBITDA of $30.4 million. • Our investment in the Enterprise segment grew to $2.8 million across technology, marketing, operations, Building a more valuable Company risk and commercial areas. We won new clients and Investing through the downturn grew our pipeline. In an era of extended ultra-low interest rates, • Our investment in Transaction Monitoring, in electronic finding what represents enduring ‘value’ is difficult for verification and in fraud management over the last investors. To add to that, the substantial changes we three years has meant whilst we supported 26% more can already see in the global economic environment, transactions, our operating expense was flat across risk, as well as the ones we cannot yet see, makes the and our losses actually declined. picture even more difficult. At OFX, the management • Our teams globally, despite the most difficult and the Board believe the sources of a more valuable environment we have seen through COVID-19, told us company are: they were more engaged (engagement score up 11%) • Continued strong cashflow generation. because of the increased attention to learning and development, the flexibility in their roles, and their trust • Strong and sustainable revenue growth, with and confidence in our leaders. operating leverage.

6 Annual Report 2021 | OFX Group Limited From the CEO

The United Kingdom/Europe saw revenues decline 16.7%, driven by the economic and political difficulties associated with both COVID-19 and Brexit. However, the team has continued to focus on managing our risks well and has secured a new European licence with the Central Bank of Ireland, which will be the platform we need to push further into Europe in the future. We have also grown our commercial investment, substantially increasing our marketing investment with good traction. Whilst it has been a tough backdrop, we are very happy with the way the team has managed its risks, continued to find new opportunities, and continued to serve our clients to the highest standards.

Our North American team also performed strongly, growing revenue 5.2%. Pleasingly they have delivered growth in the Corporate and Online Seller segments as well as growth of 14.6% in the Consumer segment in 2H21 vs 1H21. Further, they have implemented stronger disciplines and technology in our risk approach, leading to a reduction in losses. They grew Corporate at the fastest rate ever, and we can see a good pipeline of Enterprise opportunities. We were sad to farewell Lisa Frazier, who was Chair of USForex and CanadianForex, but we were delighted to welcome Len Shen, an outstanding Risk and Compliance professional, to chair USForex and CanadianForex. We continue to see strong growth in North America as a critical strategic imperative.

Conclusion Overall, whilst results fluctuated, we are pleased with the progress we made in FY21. We are, no question, a stronger and more valuable Company. We are better equipped to win in a post-COVID era, and morale is strong.

Thank you to our investors, for investing in us this year. Global highlights It has been a very unusual year for markets, but the OFX model and the OFX team have operated well. Our global operating model and presence in all the major regions continues to be a source of competitive A big thank you to the Board for all your counsel, it advantage as it is highly valued by our clients and has been very reassuring to be able to access your is difficult to execute well over time. During FY21 experience in these times. Thank you also to our the regions performed well, noting that economic loyal clients. We never take your custom for granted. conditions varied, with United Kingdom/Europe being the hardest hit in terms of GDP and confidence. Finally, a big thanks to all the dedicated OFXers who make this such a great Company for all your hard work, Our Asia Pacific team performed strongly. Revenue for your enthusiasm and for your support for each was down 0.6% overall, however, excluding Consumer other in building this great Company. was up 20.4%, underpinned by a strong performance in Australia and New Zealand and particularly strong delivery in both the Corporate and Online Seller segments. Asia has also reset well and we are now seeing positive momentum, especially in Corporate. Australia has led the company globally in resetting and improving our existing Enterprise relationships, as Skander Malcolm well as both winning new relationships and building a Chief Executive Officer and Managing Director pipeline of future opportunities. 18 May 2021

Annual Report 2021 | OFX Group Limited 7 Executive Team Executive Team

John (‘Skander’) Malcolm | Chief Executive Officer and Managing Director Skander joined OFX in February 2017 and has more than 26 years’ experience in financial services across consumer payments, consumer finance, joint ventures, partnerships, commercial lending and leasing and digital. He has worked in Australia, New Zealand, the UK, the US, the Middle East, Africa and Russia. He previously served as President and CEO of GE Healthcare, Eastern and African Growth Markets and, prior to that, as President and CEO for GE Capital, Australia and New Zealand. He holds a Bachelor of Economics from University of Sydney and is a Member of the Australian Institute of Company Directors.

Selena Verth | Chief Financial Officer Selena joined OFX in October 2017 and has more than 22 years’ experience in finance, analytics, M&A and risk across various roles. Her most recent role was Head of Finance – Platforms, Superannuation and Investments and Head of Wealth Analytics and Insight at BT Financial Group Australia. Prior to this, Selena held a number of senior financial roles within GE, including Leader, Financial Planning and Analysis and Commercial Finance for GE Global Growth and Operations, Australia and New Zealand and Director of Business Development for GE Australia. Selena has a Bachelor of Commerce and Executive MBA from the Australian Graduate School of Management. She is a fellow of CPA Australia and is a Graduate of the Australian Institute of Company Directors.

Mark Shaw | Chief Operating Officer and Chief Risk Officer Mark joined OFX in January 2018 as Chief Risk Officer and has been Chief Operating Officer and Chief Risk Officer since 1 March 2019. In his role Mark is responsible for the Group’s global operations and risk functions. Mark has almost 20 years’ experience in financial services gained at leading Australian and New Zealand banks. Most recently he led the Operational Risk and Compliance function for the Australia Division at ANZ. Mark held several other senior roles within ANZ including Head of Compliance in both Australia and New Zealand. Before joining ANZ in 2007, Mark worked at Suncorp managing the group’s governance, policy and regulatory training frameworks and overseeing compliance and operational risk teams across Australia. Mark holds Bachelors degrees in Computer Science and Law from the University of Queensland and has also completed all three levels of the Chartered Financial Analyst (CFA) program.

Adam Thomas | Chief Technology Officer Adam joined OFX in December 2019 and was promoted to Chief Technology Officer in August 2020. He has more than 20 years’ experience in IT and product development across finance, media and telecommunications and management consulting across many more industries. His speciality is combining agile, product-led engineering teams with commercial enterprise architecture to provide scalable capability for business growth and product innovation. Most recently, Adam was Global Chief Architect for News Corp and Head of Architecture and Technology Strategy for News Corp Australia, leading the transformation of the many mastheads towards digital sustainability. Prior to that he was Head of Platforms, leading large-scale engineering and systems integration teams providing cost efficient delivery of capabilities and innovation. Adam previously worked in Management Consulting for PwC and IBM. Adam holds a Bachelor of Science (Business Information Technology) from the University of NSW.

Elaine Herlihy | Chief Marketing and Product Officer Elaine commenced her role as Chief Marketing Officer at OFX in May 2019 and was appointed to the role of Chief Marketing and Product Officer in August 2020. She has over 20 years’ experience in strategic marketing, brand, communications and sales in FinTech, Banking, Superannuation and Media (B2C and B2B). As Marketing Director at PayPal Australia, Elaine was responsible for driving customer growth and engagement across both the consumer and merchant portfolios and building the PayPal brand in Australia. Prior to joining PayPal, Elaine spent eight years at Westpac Group leading brand and marketing functions across both Westpac Bank and BT Financial Group’s Superannuation business. Elaine also worked in a variety of marketing and communications roles over a nine-year period at Reuters in London. Elaine holds a Bachelor of Commerce from University College Dublin and a Higher Diploma in Marketing Practice from the Smurfit Graduate School of Business in Dublin. She is a Graduate of the Australian Institute of Company Directors and is an Independent Director of Mine Super and the PayPal Giving Fund in Australia.

8 Annual Report 2021 | OFX Group Limited Executive Team

Alfred Nader | President, North America Alfred joined OFX in September 2019. He has over 20 years’ experience in all aspects of cross-border payments and foreign exchange, having held senior management positions at Western Union and Travelex. Before joining OFX, Alfred was Regional Vice President for Latin America and the Caribbean for Western Union Business Solutions (WUBS) and was responsible for all WUBS activities in the region. While at WUBS, Alfred also served as Vice President of Corporate Strategy and Development working in M&A and negotiating international partnership deals. Prior to that, he held several senior roles with Travelex Global Business Payments. Alfred holds a BBA from The George Washington University and an MBA from MIT’s Sloan School of Management.

Sarah Webb | President, United Kingdom and Europe Sarah joined OFX in December 2018 as President, United Kingdom and Europe and has more than 20 years’ experience in payments and a track record of developing client relationships, product initiatives and building profitable businesses. Prior to this, Sarah held the role of Managing Director, Global Payments Networks at Barclays, where she led a team responsible for managing strategic partnerships across credit and debit portfolios globally as well as leading the Barclaycard PSD2 program. Before joining Barclays, Sarah was Head of Global Product Management, Commercial Payments, at American Express. Sarah holds a Bachelor of Science (BSc) degree in Maths with Management from Imperial College, University of London.

Yung Ngo | President, Asia Pacific Yung joined OFX in March 2019 as President, Asia Pacific. Yung has over 20 years’ financial services experience having held senior management positions at Westpac, St.George Bank and GE Capital leading large-scale operations across retail banking, home lending and commercial finance. He has extensive experience driving growth across multiple channels including direct to consumer and businesses, business partnerships and third party as well as call centre distribution. Prior to joining OFX, Yung led Westpac Premium’s business in New South Wales, the United Kingdom and Asia. Yung holds a Bachelor of Jurisprudence and a Bachelor of Laws from UNSW and is also a Graduate of the Australian Institute of Company Directors.

Kate Svoboda | Chief People and Culture Officer Kate joined OFX in January 2021. Kate has over 20 years’ experience in people and culture across a range of roles in the financial services industry. Her most recent role was as Chief People and Culture Officer at Genworth Australia where she led culture and engagement, organisational design and effectiveness, capability and workforce planning, talent acquisition and development, diversity and inclusion and remuneration and benefits. Prior to Genworth, Kate worked as a Senior Human Resources Business Partner for Challenger and held various human resources roles at the Commonwealth Bank of Australia. She has also worked in a range of management and clinical roles in public health. Kate has deep experience developing people and culture strategies that support and enable business strategy. Kate has a Masters of Business Administration (University of New England) and a Bachelor of Speech Pathology (University of Queensland).

Elisabeth Ellis | Chief Legal Officer and Company Secretary Lis joined OFX in September 2019. With more than 25 years’ experience as a corporate and commercial lawyer, Lis has worked in Australia and across Asia, based in Sydney, Hong Kong, Mongolia and Thailand. Lis has extensive commercial and negotiating experience, as well as deep experience navigating varying legal and regulatory systems across multiple jurisdictions. Before joining OFX, Lis was a partner at MinterEllison, where she worked for 19 years. Prior to that she worked at Allens Arthur Robinson. Lis holds a Bachelor of Science and Laws (Honours) from the University of Sydney and is admitted to practice law in New South Wales (1993) and Hong Kong (1999). She is a Graduate of the Australian Institute of Company Directors.

Annual Report 2021 | OFX Group Limited 9 Environmental, Social, Governance

Environmental, Social, Governance

Table of contents

13 OFX Group ESG Pillars 17 Social 26 Governance 17 Moving money safely around the world 26 Cybersecurity and data 15 Environmental 17 Selling practices 28 Privacy 15 Doing our best for our local and 18 Transparency in pricing and product 29 Fraud and financial crime prevention global community 19 Connecting people globally and protection 15 Energy footprint 19 Supporting successful business cross- 30 Governance and conduct 16 Waste management and recycling border trade 16 Education and community 19 Community partnerships involvement 20 Volunteering and fundraising 16 Water consumption 20 Ethical and sustainable business practices 22 Our people 22 Employee engagement 23 Diversity and inclusion 24 Pay equality 24 Wellbeing and safety 25 Talent development

10 Annual Report 2021 | OFX Group Limited Environmental, Social, Governance

CEO’s message

At OFX we embrace the notion that ‘making a difference’ is why we work at OFX. That translates to all our stakeholders – our clients, our communities, our investors, our regulators and our people.

We are committed to making a difference through our Environmental, Social and Governance (ESG) program. We will build upon prior work as well as undertake a review of our program to see how we can make it better, including building a better framework. This framework will enable us to identify, assess and manage those ESG issues which are most relevant to our business. This includes the way we price and sell our products and manage client privacy and data security, as well as our environmental and other social responsibility considerations.

I’m pleased to say that we continued to make progress across each of our ESG pillars in FY21, including developing a Group philanthropy strategy to guide us in more effectively supporting community causes that align with our purpose and values.

In the following pages, we call out our key achievements across each of our ESG pillars, as well as what we aim to achieve in the year ahead. We are proud of how we are seeing our ESG work take shape and we look forward to developing this further to the benefit of all our stakeholders.

Annual Report 2021 | OFX Group Limited 11 Environmental, Social, Governance

Introduction

OFX recognises the constantly evolving ESG Report sustainability and social requirements and our Formal reporting assists the Company to responsibility to provide transparent reporting demonstrate transparency in the way we against these requirements to our stakeholders. manage a range of economic, environmental and social practices and performance across our ESG Framework ESG Framework. We are committed to regular Our ESG Framework sets out the pillars that measurement, improvement and reporting against underpin our approach to the key Environmental, targets as a driver of the long-term performance Social and Governance issues that OFX has of our business. assessed as the most critical in relation to the Company and its stakeholders. Of these, we Our FY21 ESG Report is published for stakeholders recognise that the key issues for OFX include: to understand OFX’s ESG approach. It highlights • Selling Practices (see Social – page 17); the important achievements the Company has made over the past year and outlines the further • Data Security (see Governance – page 26); and work prioritised for the year ahead. The objective • Customer Privacy (see Governance – page 28). of our ESG Report is to act as a benchmark from which to measure future progress. This is aligned with the key issues identified in the Sustainability Accounting Standards Board This report was approved by the OFX Board of materiality map as the material issues that are Directors on 18 May 2021. most likely to impact the financial condition or operating performance of a company operating in the consumer finance industry.

The ESG Framework adopted by the OFX Board of Directors in March 2021 will be reviewed annually and updated as required.

12 Annual Report 2021 | OFX Group Limited Environmental, Social, Governance

ESG pillars

Cybersecurity and privacy Systems and rigour Technology Our people

Local and global Fraud prevention environments Gov and protection ern Energy footprint t an Processes, teams and systems n c Waste management e e Technology and recycling m n Working with regulators Water management o r and stakeholders Education and community i

v

involvement n ESG E pillars

Social

Community People Connecting people globally Culture and values Supporting global trade Employee engagement Selling practices Diversity and inclusion Community partnerships Wellbeing and safety Transparency in pricing/product Talent development Volunteering and fundraising Employee value proposition Ethical and sustainable practices

Annual Report 2021 | OFX Group Limited 13 Environmental, Social, Governance

FY21EnvironmentEnvironment key achievements Environment Environment Head office has a 100%100% Head office has a 100% 4.5 4.5Head office has a Energy efficient Laptops and electronic Energy efficient Laptops and electronic technology signing have almost technology signing have almost 4.5 platforms that are eliminated our need NABERS platformsEnergy that efficient are eliminatedLaptops ourand needelectronic NABERS cloud-based to print energy rating cloud-basedtechnology to printsigning have almost energy rating platforms that are eliminated our need NABERS cloud-based to print energy rating

Social

Upfront female representation Upfront 33%female representation 11% 33%on the board and transparent 11% on the board and transparentpricing increase in employee pricingUpfront increase in employee 33% femalefemale representationrepresentation engagement 50%female representation transparent engagement11% 50%onon the the Global board Executiveand on the Global Executive pricing increase in employee engagement 50% female representation onMAKE the GlobalA DIFFERENCE Executive DAY Selling practices No like-for-like MAKE A DIFFERENCE DAY Selling practices No like-for-like aligned with gender pay gap Introduction of paid aligned with gender pay gap Introduction of paid customer outcomes volunteeringMAKE A DIFFERENCE leave DAY customerSelling outcomespractices No like-for-like volunteering leave aligned with gender pay gap Introduction of paid customer outcomes volunteering leave Governance

Adoption of a data Global privacy Multi-factor Enhanced device Adoption of a data Global privacy Multi-factor Enhanced device strategy to support policy authentication biometrics to protect strategy to support to protect protection of our policy authenticationfor online account biometricsour customers from protectionAdoption of of our a data Global privacy for onlineMulti-factor account our customersEnhanced from device client data access online threats clientstrategy data to support policy accessauthentication onlinebiometrics threats to protect protection of our for online account our customers from client data access online threats

14 Annual Report 2021 | OFX Group Limited Environmental, Social, Governance

Environmental

Doing our best for our local and global environment

The nature of OFX’s business, driven by our human + digital offering, means that OFX is not a high consumer of energy, however, we have taken steps to mitigate and monitor this. We are committed to educating our people on their impact on the environment and we encourage our people to seek opportunities to participate in community initiatives that impact on the environment both locally and globally.

Energy footprint At OFX, we consider the environmental impact of our operations and take steps to reduce our energy footprint. This includes: • Our business is 100% cloud based, which means that we do not run data centres; • Minimising energy use as much as possible in our office locations with energy-saving sensor settings for lighting, heating and cooling and monitors; • Our head office in Sydney has a National Australian Built Energy Rating System (NABERS) Energy rating of 4.5 stars (between Good and Excellent and better than the average star rating for office buildings (2,800 audited) of 4.32).

A significant source of energy use is our technology platforms. Our business is 100% cloud-based and OFX hosts its technology with Amazon Web Services (AWS) (the Company’s largest supplier). AWS’s infrastructure is 3.6 times more energy efficient than average data centres and customers leveraging AWS perform the same task with an 88% lower carbon footprint.

Annual Report 2021 | OFX Group Limited 15 Environmental, Social, Governance

Waste management and recycling We aim to reduce waste generated from our business Our FY22 environmental operations through our waste practices including: initiative commitments • Encouraging our people to consider the environment in their daily activities at OFX and providing facilities to recycle materials such as paper, cardboard, In FY22 we will: plastics, glass and other recyclables. We also provide facilities for the collection and re-use of organic food • monitor paper, electricity and water scraps; consumption; • Providing our people with laptops so the need for • enable universal adoption of e-signature tools printing is significantly reduced and where printing to further reduce printing of documents for is required, our printers have default settings to signature; print in black and white and double-sided; • recycle ink and toner cartridges to reduce • Utilising e-signature tools for execution of landfill; documents, significantly reducing the need to print documents; and • participate in technology recycling programs that allow credit for trade-ins on used • Mirvac, the landlord for our Sydney office, is on track equipment and donation programs for to meet its zero waste goal by 2030. charities; • continue to educate our people on ways to minimise their impact on the environment, including when working at home; • actively promote involvement in community activities to improve our local and/or global Education and community involvement environment; and We regularly educate our people to consider the • minimise employee travel and investigate environment in their activities at OFX. We provide carbon offsets for air travel. educational information about recycling in our internal communications and employee resources, and participate in environmental initiatives such as Earth Hour and Clean-Up Australia Day.

Water consumption Our head office has a NABERS water rating of 4.5 stars (between Good and Excellent and much better than the average star rating for office buildings (2,800 audited) of 3.93).

16 Annual Report 2021 | OFX Group Limited Environmental, Social, Governance

Social

Our role in the community

Moving money safely around the world Selling practices As a business that moves millions of dollars for An OFX value is ‘Inspiring Customer Confidence’. clients around the world every day, it is critical This reflects the critical importance we place on that OFX manages its risks in a way that maintains maintaining customer trust in the way we do business. the trust of our clients and banks and meets the Our people, including our sales teams, are subject to expectations of regulators. We have a strong culture the OFX Code of Conduct which requires that they: of risk and compliance, with particular emphasis on • conduct themselves with openness, honesty, the responsibility that OFX has as an international fairness and integrity, and in the best interests money services provider to help prevent and detect of OFX and its stakeholders, including the general financial crime. public; and • act ethically in their approach to business decisions and be fair and reasonable in dealing with customers and suppliers, including negotiating and administering contracts and other business relationships.

As part of our continued focus on risk management, we also seek to ensure that our remuneration framework We invest in each of the encourages effective management of non-financial following to maximise the risks by focusing on the way in which sales are made. protection available to our In response to the Royal Commission into Misconduct in Banking, Superannuation and Financial Services, in customers: early 2019 we undertook a review of the Company’s remuneration practices including any commission arrangements in place for sales and customer service positions. The key objectives of this review included Banking relationships ensuring that the incentive arrangements for these roles: • Are equitable and transparent and are aligned to Systems and security our corporate objectives including optimal customer outcomes; and • Operate within a strong risk management Fraud protection framework and are reflective of the regulatory technology and set-up environments in which we operate. The outcome of that review was to replace a number of existing commission-style sales plans with time- Our processes, teams limited or quarterly short-term incentive (STI) and systems plans for the majority of our front line sales roles globally. This change was designed to drive positive behaviour, to protect against inappropriate selling practices and provide transparency with respect to our remuneration arrangements. Only sales roles whose target customers are more sophisticated larger

Annual Report 2021 | OFX Group Limited 17 1 0 1

EmploEmployeeyee engagement engagement0% 5% 5%

70% 65%

Environmental, Social, Governance 59%

FY19 FY20 FY21

Social continued Rate comparison table $15,014

What could you save using OFX vs. Bank? $14,756 Transfer AUD$20k to USD and you could get up to USD$622 more this month. $14,576 $14,566 corporates or large enterprise clients remain on $15,014 $14,392 commission-style plans in line with the market $14,756 practice of sales employees who bring in new business on a longer sales cycle. $14,576 $14,566 Our Quality Assurance processes for sales $14,392 performance include supervisors listening in on calls made by sales team members to ensure adherence to appropriate selling practices. As part of our risk governance framework, we have quarterly Executive Risks Committees where we review risk issues across our business. In addition, an Employee Incentive Governance Committee comprising the Chief People and Culture Officer and the Chief Financial Officer meet quarterly to assess sales employees’ behaviour before incentive payments are made. In FY21, this Committee withheld incentive payments on two occasions, OFX ANZ CBA NAB Westpac OFX ANZ CBA NAB Westpac including where there had been a failure by a sales The comparison savings are based on a single transfer of AUD$20,000 employee to comply with the Company’s policies. to USD. Savings are calculated by comparing the exchange rate including margins and fees provided by each bank and OFX on the same day Other practices that support the integrity of our (1 April 2021). Pricing data is provided by an independent third party, selling practices include: FXC Intelligence Ltd. The comparison savings provided is true only for the example given and may not include all fees and charges. Different • Our sales teams do not provide financial advice. currency exchange amounts, currency types, dates, times and other We educate sales teams on the need to ensure individual factors will result in different comparison savings. These results therefore may not be indicative of actual savings and should be that they are not providing advice and our used only as a guide. The rate comparison chart is updated monthly. quality assurance processes include supervisors listening in to calls to ensure financial advice is not provided; Transparency in pricing and product • 70-80% of OFX’s sales come through digital We are committed to product information transparency acquisition channels (with over 80% coming to enable customers to choose the most suitable product through OFX.com). This digital experience is for them. We aim to provide a competitive price that consistent for every customer and negates the reflects the value of the service we offer. We offer ‘bank- risk of unethical selling practices by individual beating’ highly competitive rates, plus support to make sales team members; better decisions to clients who value the best of digital • OFX does not engage outsourced sales experience and human touch. agents thereby further minimising the risk of inappropriate selling practices. Our referral In our Australia, USA, UK and Canada markets we publish partners refer opportunities to OFX and do not on our home page an example comparison of the savings engage in sales activities on our behalf; and our clients can enjoy versus banks. Savings are calculated by comparing the exchange rate including margins and • We have a complaint handling process and voice fees provided by each bank and OFX on the same day. of customer program whereby we receive direct Pricing data is provided by an independent third party. feedback from customers. This feedback is used to manage customer issues and to improve our We provide transparency to our clients of their rate, front line coaching and training programs. up front, prior to booking any transfer. We disclose the customer rate inclusive of our OFX margin and any OFX fee and the recipient amount.

18 Annual Report 2021 | OFX Group Limited Environmental, Social, Governance

Connecting people globally Community partnerships We’re a team of experts, here to help our clients every During FY21 we commenced work on a Group step of the way. With offices around the world, our philanthropy strategy to support causes that align business day follows the sun so, regardless of the time, with our purpose and values. Supporting victims of there is always someone available and willing to help financial crime is a cause that aligns not only with when it matters most. our purpose but also with our value of inspiring customer confidence and keeping our customers at the centre of everything we do. We have commenced We are here to support our clients to move a process of identifying organisations that would money in over 50 currencies, helping to: benefit from sharing our risk management expertise and other skill sets to establish volunteer programs for OFX employees. Support the global workforce As part of our commitment to being an organisation Support loved ones that Makes a Difference, we promote the work of charitable organisations through our internal Keep businesses moving with communications and encourage our people to support social causes through not-for-profit cross-border trade organisations that align with our purpose and values. This includes opportunities to support charities through fundraising and donations, and through Supporting successful business volunteering opportunities. cross-border trade OFX’s philanthropic approach is based on a philosophy We believe informed decisions are the best decisions. of giving back to the communities in which we live and We share insights that will help make a difference operate through: to the way individuals and businesses move money • Group-level support for the global charity, Save the internationally. We invest time and resources to improve Children, which focuses on at-risk children around financial literacy when it comes to foreign exchange. the world; We build genuine relationships with our clients to help • Support by our offices for local charities; and them navigate the complexity of market movements. • Employee-driven fundraising and donations. Currency volatility can make it hard for any business to judge foreign exchange markets. Working with Save the Children is an aid and development agency a currency expert to develop a currency plan to with a global vision and strategy for improving the lives safeguard against negative market movements can of children worldwide. This charity was selected by OFX help to relieve uncertainty and provide greater to partner with because of its: confidence when it comes to running a business. • Alignment to our desire to support victims of financial crime, many of whom are children; We provide practical and accessible tools to share • Recognisable and trusted reputation which is well knowledge of global events and their impact on FX known to OFXers globally; markets with: • Global reach, enabling all OFXers to make a • Daily or weekly commentaries; and connection locally; and • Monthly Currency Outlooks: • Work in ‘making a difference’ in the lives of vulnerable – A snapshot of what could impact the major and disadvantaged children. currencies in the month ahead, in an easy-to- digest one-page format; and – Articles that empower our clients by explaining important currency market trends and drivers.

Annual Report 2021 | OFX Group Limited 19 Environmental, Social, Governance

Social continued

Volunteering and fundraising Ethical and sustainable business practices Our people are provided with a paid Make a OFX recognises that as a global business and as Difference Day annually (in addition to their annual a significant purchaser of goods and services we leave) to participate in charitable programs that benefit have a responsibility and opportunity to help the community. Whilst COVID-19 limited people’s eradicate modern slavery. We also recognise that our ability to utilise Make A Difference days in a safe way commitment to this is essential to running a sustainable in FY21, we were still able to support charitable causes business. We understand the importance of responsible throughout the year including: procurement and ensuring that environmental, social • Members of our OFX London team (virtually) and ethical considerations are taken into account when rowing, running, jogging, walking and cycling 346km making procurement decisions. in aid of London Youth Rowing, a charity that OFX has issued a Modern Slavery Statement regarding supports the health and fitness of young people the risk of modern slavery in the operations and supply from London’s most disadvantaged communities, chain of OFX Group Limited (and its owned and controlled as well as Explorers Against Extinction which entities), as well as the steps it has taken to respond to promotes conservation and protection of rare the risks identified (refer to our website for details). and endangered species and their environments; • Our London business partnered with Ethical Angel OFX has a global supply chain made up of approximately this past year to keep people engaged and support 1,500 direct suppliers. 494 suppliers which are communities during lockdowns. Our people considered to be more at risk of modern slavery have delivered projects including a social media strategy been assessed by reference to OFX’s Risk Assessment review and T-shirt and logo designs; Framework. 15 were identified as being higher risk • Members of our OFX North America team having regard to industry or geography. supporting Dress for Success through employee We have undertaken the following in FY21: donations and Surge for Water through corporate donations; • Conducted a gap analysis of our current practices against the Australian Modern Slavery Act • Members of the OFX Australia team supported the requirements; local environment by organising a waste clean-up in Sydney’s CBD as part of Clean Up Australia Day; and • Identified key modern slavery risk factors for our business; • As part of our support for International Women’s Day, partnering with Dress for Success and • Adopted a Risk Assessment Framework; supporting their Empower Hour campaign to • Mapped the OFX Supply chain and identified raise money and awareness for women (mostly categories of high risk vendors; from disadvantaged backgrounds or who have • Updated contract templates used by OFX to experienced domestic/family violence) seeking specifically oblige our counterparties to avoid financial independence through employment. modern slavery; • Updated our Code of Conduct to reflect the Company’s position on human rights; and • Updated our Whistleblower Policy to provide a clear grievance channel for employees and suppliers to use in managing modern slavery.

20 Annual Report 2021 | OFX Group Limited Environmental, Social, Governance

We recognise that as a truly global business and as a significant purchaser of goods and services we have a responsibility and opportunity to help eradicate modern slavery.

Our FY22 Community commitments

In FY22 we will: • Explore potential partnerships and community engagement opportunities that enable OFX to • Further develop and implement our philanthropy support Indigenous education and employment; strategy to increase our contribution to causes aligned with supporting victims of financial • Further develop our response to the risk of crime. This will include: modern slavery by: – Sharing our risk management expertise – Undertaking enhanced due diligence on high with identified organisations through risk vendors; OFX employees volunteering their time – Adopting an updated Vendor Management and expertise; Policy to require ongoing due diligence and – Implementing our employee-driven oversight of modern slavery risks; community support by enabling OFXers to – Updating the Employee Handbook to reflect nominate and vote for local charities they care the Company’s position on human rights; about each year to receive a contribution from the Corporate philanthropic budget. This is – Instituting online training for all management another way for OFXers to ‘make a difference’ and staff on OFX’s requirements; locally in their own communities; and – Engaging with suppliers in the highest risk – With the loosening of lock-down restrictions, profile groupings to assess exposure to create more opportunities for employees to modern slavery practices; and volunteer for local charities in team activities – Considering the benefits of a stand-alone which support a community need and human rights policy to expressly articulate ‘make a difference’. our approach to human rights and modern slavery.

Annual Report 2021 | OFX Group Limited 21 Environmental, Social, Governance

Social continued We are better together We are stronger as one team. Push boundaries Our people Discover what is possible.  Get (the right) stuff done Own it, execute it, deliver Our people are central to the success of our business. We provide a Human + Digital offering under a global the exceptional. operating model that allows us to be available for our customers 24/7. Inspire customer confidence OFX employs over 400 people across Asia Pacific, North We keep the customer at the centre of America and the United Kingdom and Europe. This everything we do. includes permanent employees, casuals and maximum- term contractors. Always keep learning Our culture is underpinned by our values which guide how we work, how we interact with each other and how Share your expertise. Learn from others. we engage with our customers. They help distinguish us from our competitors and build a brand that reflects the character of our business: Employee engagement • We are better together – we are stronger as one team. In December 2020, we conducted our annual employee engagement survey and the results indicated an 11 • Push Boundaries – discover what is possible. point increase in employee engagement year-on-year. • Get (the right) Stuff Done – own it, execute it, deliver the exceptional. The increase in engagement was very encouraging and • Inspire Customer Confidence – we keep the was driven by a combination of strong leadership, the customer at the centre of everything we do. flexibility we provided employees and our commitment to retain staff during the pandemic. Feedback and the • Always Keep Learning – share your expertise. lessons we have learned over the past year have informed Learn from others. a set of guiding principles we intend to utilise in how we From these values, we have developed Personal and work effectively moving forward. Another major driver of Leadership Attributes that define what we expect of the increase in engagement was the role that leaders and our people and our leaders. managers played over the past year. Trust and confidence in our leaders and the critical role managers play in These are brought to life and supported by our keeping people informed and caring about the wellbeing reward and recognition programs and our internal of their team members came to the fore in FY21. communication channels, such as our quarterly employee town halls, our fortnightly Company newsletter Hello OFXers, and blogs from the CEO and 1 0 1 other members of the Global Executive Team. They are EmploEmployeeyee engagement engagement0% 5% 5% also reflected in our branding internally and externally, visually in our office space as well as reinforced through the design of our performance management system. Our Personal and Leadership attributes also 70% operate as a benchmark for assessing talent in our 65% recruiting process and for talent management and 59% succession planning.

FY19 FY20 FY21

22 Annual Report 2021 | OFX Group Limited $15,014

$14,756

$14,576 $15,014 $14,566 $14,392 $14,756 $14,576 $14,566 $14,392

OFX ANZ CBA NAB Westpac OFX ANZ CBA NAB Westpac Environmental, Social, Governance

Diversity and inclusion Our diversity and inclusion efforts in FY21 are reflected Reflecting the diversity of our customers, other in the following: stakeholders and the communities in which we operate • 43% of OFX employees are female; our Board is 33% enables us to better understand and serve their female; our Global Executive Team (CEO + CEO-1) is needs, build trust and make better business decisions. 50% female and our Senior Leadership Team (CEO-2) OFX is committed to building a culture and working is 43% female; environment in which our people can thrive, feel • Our talent management processes support equal comfortable and respected and be themselves at work. access to promotion and succession opportunities and are managed with a gender diversity lens, OFX seeks to leverage the value that comes from focusing on diverse emerging talent; people who have diverse backgrounds, knowledge, lived experiences and perspectives. The Company • We provided education and training to all people defines diversity as all the characteristics that make leaders to ensure all hiring processes consider a individuals different from each other including but diverse range of candidates; not limited to work background, age, gender, gender • We provided inclusivity and unconscious bias identity, marital or family status, cultural background training for all of our people as part of continuing or identity, socio-economic background, ethnicity, to embed a culture of diversity and inclusion people with disabilities, religious belief, sexual across OFX; orientation, perspective and experience. As such, OFX • Our people complete anti-harassment, anti-bullying policies, benefits and practices are inclusive of these and code of conduct training on an annual basis; diversity dimensions. • We have collected point-in-time data on other OFX is committed to supporting and further diversity dimensions including cultural and linguistic developing diversity and inclusion at all levels of diversity, age and sexual orientation to monitor the organisation by attracting, recruiting, engaging, the degree to which we reflect the communities rewarding and retaining diverse talent and aligning our we serve and to inform our programs of work; culture and people systems and processes with this • We provided gender neutral paid parental leave commitment. To support an inclusive workplace, any and a parental leave engagement and support plan form of unlawful discrimination, harassment, bullying, to support people before and during their parental vilification and/or victimisation will not be tolerated. leave and after their return to work. They also have access to a mentor to support the transition Each year, OFX’s Board commits to measurable back to work and access to Keeping in Touch days, diversity and inclusion objectives against which designed to keep employees up to date with what progress is reviewed at the end of the year. is happening across the organisation and to hear from other employees who have made the transition back into the workplace; and • We introduced domestic violence leave for our employees globally, regardless of gender or orientation, which provides for two weeks of paid leave for any OFX employee if they or someone in their family is experiencing family and domestic violence and one week of paid leave for any employee who is supporting an immediate family or household member who is experiencing family or domestic violence.

Annual Report 2021 | OFX Group Limited 23 Environmental, Social, Governance

Social continued

Pay equality Every year, we undertake a pay equity analysis to Our FY22 review the pay levels of women and men in the People commitments company. Of the 11 role types across OFX that enable ‘like for like’ comparison of pay, there were small gaps in base pay in favour of both males and females, none In FY22 we will: of which indicated systemic gender bias. On an overall basis, when averaging base pay of all Australian-based • Implement our approach to the future of work employees (excluding the CEO), the average female at OFX based on lessons learned and feedback base salary is -9.5% compared to average male base from our people during FY21; salary as at 31 March 2021 (down from -10.6% in FY20 and -12.2% in FY19). This is compared to a 15% • Maintain minimum 40% female base salary pay gap across all industries in Australia representation on the Global Executive Team; and a 23% base salary pay gap in Auxiliary Financial • Maintain minimum 30% female Services (WGEA November 2020). This overall gender representation of the Board and increase our pay gap reflects the opportunity for OFX to continue target to 40% female representation; to progress female representation at higher levels (therefore higher remuneration levels) of the Company • Increase female representation in Sales/ and to continue to conduct pay equity analyses to Commercial roles and Technology roles; identify areas in which to take specific action. • Target minimum 40% female representation Wellbeing and safety on the Senior Leadership Team (CEO-2); The health and wellbeing of our people is paramount • Track cultural diversity data on an overall and we have a culture (as well as practices and policies) basis and at a senior leadership level on a in place that seeks to support to our people. voluntary and self-identification basis; We have partnered with a wellbeing specialist, • Undertake a survey to establish baseline data Uprise, which is our wellbeing and employee assistance on inclusion in the organisation; provider and, consistent with the OFX offering, offers a human and digital service. This includes information • Establish partnerships/community and advice on managing stress, time management, engagement opportunities that enable sleep health, dealing with difficult people, nutrition OFX to support Indigenous education and and exercise, self-esteem and acceptance. Uprise employment; provides training related to working during the COVID-19 pandemic for employees and people leaders. • Continue to take a pro-active role in improving We launched Uprise in the UK in December, and the the health and welfare of our employees; and program is now global. • Continue to review our policies and practices for our people to make a difference and for us to make a difference to them, including rolling out a parental leave toolkit which supports parents – both biological and adopting – from announcement of the pending arrival through to the integration of the parent back into the workforce.

24 Annual Report 2021 | OFX Group Limited Environmental, Social, Governance

Other wellbeing initiatives in FY21 included: • Leading with wellbeing training for senior leaders; • Mindset workshop – helping employees take control of their mental wellbeing and be more efficient, resilient and happy; • Understanding stress workshop – helping employees understand how stress manifests and the steps The health and employees can take daily to reduce its impact; wellbeing of our people • September global step challenge; and • Our Good Vibes Committee (composed of employee is paramount and we representatives) focusing on supporting remote and have a culture as well in-office social connections through virtual coffee catch-ups, virtual trivia, virtual themed rooms, in- as practices and policies office pizza nights and celebration of cultural events such as Diwali and Lunar New Year. in place that support

Talent development our people. Our people are exposed to opportunities to develop and build their capability. In FY21, we focused on the development of our people to support working remotely given the transition from office based to working from home. The flexibility we offer our people in the future will be further enhanced and will enable us to attract a more diverse workforce and support our people to choose to make work choices that work best to maximise their life requirements, whilst aligning to our customer needs. Over FY21 we have delivered learning and development programs focused on remote working, resilience and wellbeing, leading and managing distributed teams, as well as sales training. We utilise the LinkedIn Learning platform to provide some of our core learning at OFX but this also allows employees to choose their own learning path aligned with personal professional interests.

Annual Report 2021 | OFX Group Limited 25 Environmental, Social, Governance

Governance

Cyber security and data

As cyber security poses an increasingly significant threat to our business globally, the security of our customers’ data and OFX corporate data is of paramount importance to OFX.

We design, build and manage the security for our Measures adopted by OFX during FY21 to enhance data global data via: security include: • Board adoption of data strategy – this will improve Our processes, systems and rigour and protect the quality of data; • We employ an information asset focused approach • Amazon Web Services and Google Cloud Platform to cyber security risk management, ensuring continue to provide data hosting services. Both appropriate ownership and oversight of systems, vendors are SOC and ISO27000 certified in relation data and risks, with ongoing technical reviews of to the security of their data centres; our platforms; • Where third parties host OFX services, their • Cyber security subject matter experts provide physical security controls are assessed as part oversight, and our risk and internal audit functions of the vendor onboarding process and they must undertake independent assurance; and comply with OFX’s minimum standard and any • We also have security processes that include local requirements; ongoing technical reviews of our platforms and due • Continuous improvement of our Security Operations diligence of third parties to ensure the presence and Center/SIEM solution to maximise coverage over the assess the effectiveness of our security controls. OFX environment; Technology • Emphasis of our environment being ‘Infrastructure as Code’, enabling teams to deliver stable, consistent • We continue to invest in our security capabilities and environments, rapidly and at scale. This automation use a range of technologies and security controls can remove the security risks associated with human to minimise the threat, likelihood and impact of error and prevent runtime issues; unauthorised access to our networks and systems. • Adopting revised policies and procedures to ensure People compliance with our regulatory obligations; and • At OFX we all have a responsibility to protect • Communication and annual training to raise customer and corporate information from misuse, awareness within OFX of security. loss, unauthorised disclosure or damage; • We deliver programs to all employees to foster a strong cyber security culture, including cyber security drills. We provide specialist secure coding training to engineering employees; and • Our risk and internal audit functions undertake independent assurance.

26 Annual Report 2021 | OFX Group Limited Environmental, Social, Governance

We invest in each of the following to maximise the protection available to our customers:

Systems Fraud protection Our processes, Banking and security technology and set-up teams and systems relationships

Our FY22 cyber security and data protection commitments

In FY22 we will: • Undertake a review of our network security; We continue to invest in • Implement an enhanced vendor management system, including enhanced information our security capabilities security assessment of vendors; and use a range of • Implement and monitor compliance with formal remote working protocols; technologies and • Continue migration of some self-hosted security controls to applications to secure cloud environment or managed services; minimise the threat, • Upgrade our Security toolsets – Email Threat likelihood and impact detection and Vulnerability management, including automation of Operating System of unauthorised access patch management; to our networks and • Elevate our BCP/DR procedures to move with the ever evolving working environment; and systems. • Continue to position OFX for ISO270001 Certification.

Annual Report 2021 | OFX Group Limited 27 Environmental, Social, Governance

Governance continued

Privacy

Protection of customer and corporate information from misuse, loss, unauthorised disclosure and damage is of Our FY22 privacy paramount importance to OFX. Measures adopted by enhancement commitments OFX to ensure compliance with privacy risks include: • Focus on compliance with relevant global data privacy regulations; In FY22 we will prioritise: • Adoption of GDPR requirements as best practice • Adoption of an enhanced data retention in all jurisdictions; policy; • Mandatory training on privacy awareness for all employees upon induction, with regular updates to • Data mapping to streamline compliance with ensure a clear understanding of data privacy policy GDPR and CCPA; and good practice to enforce a mindset of protecting • Adoption of a consent preference our customer’s data; management centre for customers globally; • Ongoing enhancement and implementation of • Updating OFX’s Privacy Impact Assessment policies and procedures; and process and ensuring this is imbedded within • Cyber security systems and rigour. the new global Vendor Management Policy and procedures; Specific measures adopted in FY21 to minimise risk of privacy breach include: • Enhanced privacy training for all employees globally; • Implementation of updated Global Privacy Policy which adopts GDPR requirements as best practice • Implementation of enhanced data breach for customers irrespective of their jurisdiction; response plan and training for all relevant • US Customer Contracts updated for compliance employees globally; and with CCPA; • Continued updating of templates and • CCPA training to all relevant employees in the customer terms to ensure compliance US and sales support in other jurisdictions; and maximum protection. • New Data Breach Notification procedure implemented in New Zealand; and • Updated templates and customer terms to ensure compliance and maximum protection.

28 Annual Report 2021 | OFX Group Limited Environmental, Social, Governance

Fraud and financial crime prevention and protection

Fraud prevention is fundamental to the continued Working with our regulators and stakeholders success of OFX. Across our markets we undergo regular independent assessments through audits of our AML programs, OFX is a global money transfer specialist, with banking compliance reviews and regulatory reviews. over 20 years’ experience and eight offices around the world. With this tenure and global footprint, We have undertaken the following in FY21: we see the diverse typologies of criminal financial • Additional screening was put in place for North activity and have built up years of data showing American customers who send money to OFX by behavioural patterns to look out for. direct debit from their bank accounts. OFX now We continually refine our detection strategies and conducts real time comparison of bank account actively investigate fraud whenever we see it. This is details provided to us by our customers against the achieved though: account details recorded by the banks themselves. This protects people from unknowingly having direct Our processes, teams and systems debits set up on their bank accounts by someone • OFX applies sophisticated systems and expertise who has stolen their identity; to detect and prevent fraud and to protect our • Multi-factor authentication when customers access customers; their accounts online is now in place globally. • Our people are accountable and empowered to This authentication helps prevent people from recognise risk. Client facing employees act as a first account takeover; line of defence against fraud and money laundering • OFX upgraded its device biometrics to a more and all employees are regularly trained to detect and comprehensive solution. The new system collects report potential suspicious activity; and analyses data on the devices customers • We maintain experienced and highly capable use to connect with OFX, alerting us to concerns compliance teams in each of our key regions and protecting OFX and our customers from who support OFX in ensuring we understand our online threats; local regulatory requirements and have effective • OFX further enhanced its transaction monitoring compliance programs in place; and platform to support the launch of OFX’s corporate • Financial crime controls are consistently tracked and receivables product, GCA for Business; and discussed at management, executive and Board level. • Phase 1 of OFX’s implementation of advanced document and identification assessment to detect Technology attempts at identity theft or use of fabricated • We continue to invest in technology to augment our identity documents: expertise with the right information to monitor and – OFX has begun screening all North American respond to key risks; and clients’ identification documents against live • Our fraud detection system monitors customer videos of clients at registration; and interaction and utilises a multitude of third party – Voice biometrics and selfie-generated IDs running information to detect potential concerns such as across various databases to improve match rates identity theft. and improve Electronic Pass Rates.

This technology will be further expanded in FY22.

Annual Report 2021 | OFX Group Limited 29 Environmental, Social, Governance

Governance continued

Governance and conduct

OFX is committed to being ethical, transparent and Our FY22 fraud and financial accountable. This is essential for the long-term crime prevention commitments performance and sustainability of the Company. Our Board and management are committed to excellence in corporate governance and aspire to the highest In FY22 we will: standards of conduct and disclosure. We focus on organisational culture by ensuring our Board and • Ensure implementation of leading-edge management are informed of incidents that may practices and technologies to support fraud impact the business and encouraging an environment and financial crime prevention will continue. where our people and stakeholders feel comfortable in This includes updating our customer risk raising issues. assessment methodology, implementing a new customer due diligence platform and Our Board and its committees have responsibility for rolling out documentation verification and corporate governance and are collectively focused facial biometrics software globally; and on the long-term success of the Company. Directors regularly review corporate governance policies • Look at ways in which OFX can further and processes to ensure that they are appropriate contribute our expertise to relevant public- and meet governance standards and regulatory private partnerships to build strength in requirements. the protections in place across the sector as well as to support Police investigations of The Company’s governance principles are designed to identified fraudsters. support business operations, deliver on our strategy, monitor our performance and manage risk. For FY21 the Company’s governance practices complied with the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (4th Edition). More detail is available in our Corporate Governance Statement on our website.

30 Annual Report 2021 | OFX Group Limited Directors’ Report and Financial Statements for the year ended 31 March 2021

Table of contents 32 Directors’ Report 75 Notes to the Financial 102 Directors’ Declaration 49 Remuneration Report Statements 103 Independent Auditor’s Report 76 1. Segment Information 70 Auditor’s Independence 79 2. Net Operating Income 109 Shareholder Information Declaration 80 3. Expenses 111 Corporate Information 71 Financial Statements 80 4. Income Taxes 71 Consolidated Statement of 82 5. Deferred Income Tax Assets/ Comprehensive Income (Liabilities) 72 Consolidated Statement 83 6. Earnings per Share of Financial Position 83 7. Cash and Cash Equivalents, Client 73 Consolidated Statement of Changes Liabilities and Deposits Due from in Equity Financial Institutions 74 Consolidated Statement of Cash Flows 84 8. Other Receivables (Current Assets) 84 9. Derivative Financial Instruments at Fair Value through Profit or Loss 85 10. Fair Values of Financial Assets and Liabilities 85 11. Financial Risk Management 92 12. Property, Plant and Equipment 93 13. Intangible Assets 93 14. Other Creditors and Accruals (Current Liabilities) 94 15. Provisions 94 16. Leases 96 17. Capital Management 96 18 Ordinary Share Capital 96 19. Dividends 97 20. Events Occurring After Balance Sheet Date 97 21. Related Party Information 97 22. Share-based Payments 100 23. Key Management Personnel 101 24. Remuneration of Auditors 101 25. Parent Entity Financial Information

Annual Report 2021 | OFX Group Limited 31 Directors’ Report

Directors’ Report

The Directors of OFX Group Limited present their report on the consolidated entity consisting of OFX Group Limited (OFX or the Company) and the entities it controlled at the end of, or during, the year ended 31 March 2021 (the Consolidated Entity or the Group).

1. Directors The Directors of the Company during the financial year and up to the date of this report are:

Connie Carnabuci | Non–Executive Director – BCom (Marketing) (with Merit), LLB, GAICD Member of the Remuneration and Nomination Committee Appointed: 1 April 2019 Independent Director Residence: Sydney, Australia Connie has over 30 years’ experience in legal practice, management and strategy, including significant private practice advice and deal experience in Asia in the technology, telecoms, new media (digital online), FMCG and renewable energy sectors. Connie has been General Counsel for the Australian Broadcasting Corporation (ABC) since July 2017. Prior to her role at the ABC, Connie was a Partner at Freshfields Bruckhaus Deringer in Hong Kong leading the firm’s IP/TMT practice in Asia. She also served as Co–head of the firm’s global technology practice. Before moving to Hong Kong, Connie practiced in Australia for 11 years, including as a Partner at Mallesons Stephen Jacques (now King & Wood Mallesons). She began her career as the Associate to the Honourable Justice Wilcox, Federal Court of Australia. Current directorships (Listed companies): Director Atomo Diagnostics Limited Interest in shares: 19,332 ordinary shares

Lisa Frazier | Non-Executive Director – MBA, Bachelor of Chemical Engineering, GradDip Finance and Investment, GAICD Member of the Audit, Risk and Compliance Committee. Lisa also served as an Independent Director on the Company’s wholly owned subsidiary boards in the US and Canada. Appointed: 1 April 2018 (Resigned 19 May 2020) Independent Director Residence: Melbourne, Australia Lisa joined OFX on 1 April 2018 and has 19 years’ experience in digital and technology specialising in digital disruption, product innovation, customer experience, data analytics and marketing across the B2B and B2C sectors. Lisa is currently the Chief Operating Officer of Judo Bank. Prior to that she was VP, Head of Innovation for Wells Fargo. Prior to joining Wells Fargo, Lisa founded her own startup and has held executive roles at multiple startup companies in San Francisco. She has also led digital and agile transformation programs for large companies, such as the Commonwealth Bank of Australia. As a partner at McKinsey & Company in New York, Lisa focused on digital transformation and the development of new business models in Technology, Media and Telecoms. Current directorships (Listed companies): Nil Interest in shares: 54,645 ordinary shares

32 Annual Report 2021 | OFX Group Limited Directors’ Report

Cathy Kovacs | Non–Executive Director – BComm (UNSW) and MappFin (Macquarie), GAICD Member of the Audit, Risk and Compliance Committee Appointed: 22 February 2021 Independent Director Residence: Sydney, Australia Cathy has over 30 years’ operational experience in the financial services industry, having held senior executive leadership roles at Westpac Banking Group, Ellerston Capital, Macquarie Group and BT Investment Bank. Cathy’s most recent executive role was as Group Head of Business Development at Westpac until March 2019, where she was responsible for advising the Westpac Executive Committee and Board on business disruption and the future of banking and wealth, making strategic investments and managing strategic partnerships. Current directorships (Listed companies): Nil Interest in shares: Nil

John Alexander (Skander) Malcolm | Chief Executive Officer and Managing Director – BEc, MAICD Appointed: 1 February 2017 Not independent Residence: Sydney, Australia Skander has more than 26 years’ experience in financial services across consumer payments, consumer finance, joint ventures, partnerships, commercial lending and leasing and digital. He has worked in Australia and New Zealand, the UK, the US, the Middle East, Africa and Russia. He previously served as President and CEO of GE Healthcare, Eastern and African Growth Markets, and prior to that, as President and CEO for GE Capital, Australia and New Zealand. Current directorships (Listed companies): Nil Interest in shares: 2,991,886 ordinary shares (of which 2,430,718 have been issued under the Company’s Executive Share Plan)1

1. The Executive Share Plan Awards are granted as issued shares and are treated as options for accounting purposes due to the structure of the plan. Refer to Section 5.3 LTI (Executive Share Plan) in the Remuneration Report.

Annual Report 2021 | OFX Group Limited 33 Directors’ Report

Directors’ Report continued

Grant Murdoch | Non–Executive Director – MCom (Hons), FAICD, CAANZ Chair of the Audit, Risk and Compliance Committee Appointed: 19 September 2013 Independent Director Residence: Brisbane, Australia Grant has over 36 years’ experience in accounting and corporate finance. As Senator of the University of Queensland, Grant’s prior professional experience includes Head of Corporate Finance for Ernst & Young Queensland and he is a graduate of the Kellog Advanced Executive Program at the North Western University, Chicago, United States. Current directorships (Listed companies): Director UQ Holdings Limited Director Lynas Corporation Limited Director Auswide Bank Limited Previous directorships (Listed companies): Director Redbubble Limited (December 2016 to November 2019) Director ALS Limited (August 2011 to July 2020) Interest in shares: 345,000 ordinary shares

Steven Sargent | Chairman – BBus, FAICD, FTSE, GAICD Member of the Audit, Risk and Compliance Committee and Remuneration and Nomination Committee Appointed: 4 August 2016 Independent Director Residence: Sydney, Australia Steve has over 42 years of global corporate experience in industries including financial services, mining, energy, healthcare, aerospace and defence. Steve’s prior executive experience includes 22 years at General Electric, where he led businesses in the USA, Europe, Asia and Australia and NZ. Steve was appointed Vice President and Officer of General Electric Company in 2008 and was a member of GE’s Global Corporate Executive Council, the first Australian to ever be appointed to such positions in GE’s history. Current directorships (Listed companies): Non–Executive Director: Origin Energy Limited Deputy Chairman: Nanosonics Limited Interest in shares: 118,444 ordinary shares

34 Annual Report 2021 | OFX Group Limited Directors’ Report

Douglas Snedden | Non–Executive Director – BEC (ANU), MAICD Chair of the Remuneration and Nomination Committee and Member of the Audit, Risk and Compliance Committee Appointed: 16 March 2015 Independent Director Residence: Sydney, Australia Doug has over 30 years’ experience in finance, consulting, strategic management and outsourcing. Doug has previously worked as Country Managing Director of Accenture Australia. Current directorships (Listed companies): Chairman Isentia Group Limited Previous directorships (Listed companies): Director Securities Industry Research Centre of Asia Pacific (SIRCA) Limited (October 2012 – December 2018) Interest in shares: 100,000 ordinary shares

The following persons were Directors of the Company either during the year or as at the date of the Report:

Connie Carnabuci Non–Executive Director Lisa Frazier* Non–Executive Director Cathy Kovacs** Non–Executive Director John Alexander (Skander) Malcolm Managing Director and Chief Executive Officer Grant Murdoch Non–Executive Director Steven Sargent Chairman and Non–Executive Director Douglas Snedden Non–Executive Director

* Lisa Frazier resigned effective 19 May 2020 ** Cathy Kovacs was appointed effective 22 February 2021

The background, qualifications and experience of each of the Directors is included on pages 32 to 35.

2. Company Secretary

Elisabeth Ellis | BScLLB (Hons), GAICD Lis was appointed as Chief Legal Officer and Company Secretary for OFX Group Limited on 30 September 2019. Lis has more than 25 years’ experience as a corporate and commercial lawyer in Australia and throughout Asia, having worked in Australia, Hong Kong, Mongolia and Thailand. Before joining OFX, Lis was a partner at MinterEllison, where she worked for 19 years. Prior to that she worked at Allens Arthur Robinson. Lis is admitted to practice law in New South Wales (1993) and Hong Kong (1999).

Annual Report 2021 | OFX Group Limited 35 Directors’ Report

Directors’ Report continued

3. Directors’ and Committee meetings The following table shows meetings held between 1 April 2020 and 31 March 2021 and the number attended by each Director or Committee member.

Audit, Risk and Remuneration Compliance and Nomination Board Committee Committee Director Eligible Attended Eligible1 Attended Eligible2 Attended C Carnabuci 14 13 By invitation 2 7 7 L Frazier3 3 2 1 1 By invitation – C Kovacs 2 2 1 1 By invitation 2 S Malcolm 14 13 By invitation 5 By invitation 6 G Murdoch 14 14 5 5 By invitation 6 S Sargent 14 14 5 5 7 7 D Snedden 14 14 5 5 7 7

1. Mr Malcolm and Ms Carnabuci are not members of the Audit, Risk and Compliance Committee; however they attended Committee meetings by invitation. 2. Mr Malcolm, Mr Murdoch, Ms Frazier and Ms Kovacs are not members of the Remuneration and Nomination Committee; however they attended Committee meetings by invitation. 3. Ms Frazier resigned as a Director effective 19 May 2020.

36 Annual Report 2021 | OFX Group Limited Directors’ Report

4. Directors’ interests The relevant interest of each Director in the equity of the Company as at the date of this Report is outlined in the table below. All interests are ordinary shares unless otherwise stated.

Opening Lapsed/ Closing Type balance Issued Acquired Disposed balance C Carnabuci Ordinary 19,332 – – – 19,332 L Frazier Ordinary 54,645 – – – 54,645 C Kovacs – – – – – – S Malcolm Ordinary 3,598,592 1,152,5601 117,900 (1,877,166)2 2,991,8863 G Murdoch Ordinary 245,000 – 100,000 – 345,000 S Sargent Ordinary 100,000 – 18,444 – 118,444 D Snedden Ordinary 100,000 – – – 100,000

1. Shares issued to Mr Malcolm during FY21 comprise: • 134,810 ordinary shares issued upon vesting of FY19 STI. These shares are subject to a 12-month holding lock. • 937,352 ordinary shares issued under the Executive Share Plan as FY21 LTI incentive, subject to vesting conditions. These shares are restricted until performance measures have been met and the corresponding loan in respect of those shares has been repaid. These shares were reallocated from shares issued on 22 September 2017 pursuant to the Executive Share Plan which were subject to vesting conditions, did not vest and were forfeited on 7 June 2020 in accordance with the terms of the Executive Share Plan. No new shares were issued. • 80,398 fully paid ordinary shares were newly issued on 1 September 2020 as a retention award pursuant to the OFX Global Equity Plan. These shares are subject to a vesting condition. 2. Shares issued to Mr Malcolm on 22 September 2017 pursuant to the Executive Share Plan were subject to vesting conditions. These shares did not vest and lapsed on 7 June 2020 in accordance with the terms of the Executive Share Plan. 3. Total ordinary shares held by Mr Malcolm comprise 2,430,718 issued ordinary shares under LTI, 480,770 issued ordinary shares by way of personal holdings and vested STI, and 80,398 shares issued as a retention award. In addition, Mr Malcolm holds STI performance rights of 166,738.

There were no disposals of shares by the Directors during the year or share transactions post year end.

5. Principal activities The Group’s principal activity during the year was the provision of international payments and foreign exchange services.

Annual Report 2021 | OFX Group Limited 37 Directors’ Report

Directors’ Report continued

6. Unissued shares under rights or options At the date of this report unissued shares of the Group under rights or options are:

Number of Expiry Date Exercise Price Shares STI – Performance rights N/A – 860,362 LTI – Options 10 Jun 24 1.56 722,612

All unissued shares are ordinary shares of the Company.

7. Dividends and distributions Dividends paid or determined by the Company during and since the end of the year are set out in Note 19 to the Financial Statements.

Final 2021 Interim 2021 Final 2020 Per share (cents) – 0.81 2.35 Total amount ($’000) – 2,015 5,845 Franked – Unfranked Unfranked Payment date – 11 December 2020 22 June 2020

On 18 May 2021, the Company announced an on-market share buyback program to replace the dividend in the near term. The on-market share buyback program will be up to 10% of the Company’s fully paid ordinary shares and will commence 7 June 2021.

8. Operating and financial review A summary of financial results for the year ended 31 March 2021 is outlined below.

As required for statutory reporting purposes, the consolidated financial statements of the Consolidated Entity have been presented for the financial year ended 31 March 2021.

The Group’s statutory financial information for the year ended 31 March 2021 and for the comparative year ended 31 March 2020 present the Group’s performance in compliance with statutory reporting obligations.

To assist shareholders and other stakeholders in their understanding of the Group’s financial information as a publicly listed entity, additional underlying financial information for the years ended 31 March 2021 and 31 March 2020 is provided in the Operating and Financial Review section of this Report.

The reconciliation and the underlying information have not been audited.

38 Annual Report 2021 | OFX Group Limited Directors’ Report

Statutory results

2021 2020 Growth $’000 $’000 % Net operating income1 117,930 125,154 (5.8%) EBITDA2 29,433 36,935 (20.3%) Less depreciation and amortisation (11,745) (10,521) 11.6% Less interest expense (1,359) (1,647) (17.5%) Less income tax expense (3,548) (4,436) (20.0%) Net profit after tax 12,781 20,331 (37.1%) EBITDA margin 25.0% 29.5% – Earnings per share (basic) (cents) 5.25 8.37 –

1. Net operating income, a non IFRS measure, is the combination of Fee and trading income and Fee and commission expense and Interest income. 2. Earnings before interest expense, taxation, depreciation and amortisation (EBITDA) is a non IFRS, unaudited measure.

The results were impacted by a significant item. The table below sets out the underlying financial results for the year ended 31 March 2021 which have been adjusted for the significant item.

Underlying results

2021 2020 Growth $’000 $’000 % Net operating income 117,930 125,154 (5.8%) Underlying EBITDA 30,401 38,249 (20.5%) Less depreciation and amortisation (11,745) (10,521) 11.6% Less interest expense (1,359) (1,647) (17.5%) Less income tax expense (3,764) (4,725) (20.3%) Underlying net profit after tax 13,533 21,356 (36.6%) Underlying EBITDA margin 25.8% 30.6% – Underlying earnings per share (basic) (cents) 5.55 8.80 –

Underlying measure of profit excludes significant items of revenue and expenses in order to highlight the underlying financial performance across reporting periods. The Company incurred non operating expenses of $1.0 million related to restructuring and retention (2020: $1.3 million).

Annual Report 2021 | OFX Group Limited 39 Directors’ Report

Directors’ Report continued

The following table reconciles underlying earnings measures to statutory results.

Year ended 31 March 2021

$’000 $’000 $’000 Profit $’000 Profit EBITDA before tax Income tax after tax Statutory profit 29,433 16,329 (3,548) 12,781 One-off expenses/non operating 968 968 (216) 752 Underlying profit 30,401 17,297 (3,764) 13,533

FY21 was a challenging year with the COVID-19 pandemic creating economic uncertainty resulting in changes to cross-border payment flow activity. Net Operating Income for FY21 was down 5.8% however there was a strong recovery in 2H21 with NOI up 18.7% on 1H21. The consumer segment was impacted most by the COVID-19 pandemic with fee and trading revenue down 15.6% and a reduction in active clients of 11.6% over the year due to reduced activity across key use cases. In contrast our investment in the Corporate and Online Seller segments continues to deliver with revenue up 11.0% across both segments.

All regions were impacted by the COVID-19 pandemic and resulting slowdown in economic activity. It was pleasing to see growth in revenue in our largest regions with A&NZ up 1.4% and North America up 5.2% despite the difficult trading conditions. Europe and Asia saw declines in revenue of 16.7% and 19.9% respectively. During the year the Group was successful in our application for a licence with the Irish Central Bank which positions the business well for further expansion into Europe.

The Company maintained a disciplined approach to expense management with underlying operating expenses up only 0.7% while continuing to invest in the growth of the Corporate, Enterprise and the Online Seller segments. The continued investment in process and technology in transaction monitoring and fraud tools led to a 41.4% reduction in bad and doubtful debts in FY21.

Underlying EBITDA for the year was $30.4 million, down 20.5% however there was a significant turnaround in 2H21 with underlying EBITDA up 82.2% vs 1H21.

The Group continues to maintain a strong balance sheet with Net Cash Held of $60.6 million as at 31 March 2021. In addition to a strong balance sheet, the Company also continued to generate a positive cash flow enabling a $10.3 million investment in continuing to improve our single scalable system and product capabilities. During FY21 the Company launched Global Currency Account functionality for our Corporate customers, improved payments capabilities and customer experience and enhanced capabilities for our Enterprise customers.

40 Annual Report 2021 | OFX Group Limited Directors’ Report

As at 31 March 2021

$’000 $’000 2021 2020 Cash and cash equivalents 275,261 235,809 Deposits due from financial institutions 27,119 32,276 Total cash 302,380 268,085 Cash held for subsequent settlement of client liabilities (241,807) (207,038) Net cash held 60,573 61,047 Collateral and bank guarantees (23,756) (36,547) Net available cash 36,817 24,500

The Group’s financial position remains strong. The balance sheet consists predominantly of cash and client liabilities, with cash net of client liabilities decreasing from FY20. The Group currently has no external debt. The financial position provides a good platform to pursue future growth opportunities and coupled with our regulatory record, provides our banking partners with assurance on our ability and diligence.

9. Strategy Our mission at OFX is to be a trusted global money provider for consumers and businesses, by combining the best of digital experience and human touch. We solve for the complexity and anxiety of moving money enabling better decisions and real savings.

OFX’s strategy relies on six key pillars of growth. We will continue to focus on delivery of critical initiatives against each of these pillars, including: • Customer experience: strengthening our client experience, with particular emphasis on improving the Corporate, Online Seller and Enterprise client experience. • Geographic expansion: – North America – continuing to invest across all segments – Consumer, Corporate, Enterprise, Online Sellers – UK – drive incremental growth in the Corporate, Enterprise and Online Sellers segments – Asia – drive incremental growth in the Corporate, Enterprise and Online Sellers segments. • Partnerships: creating more and better Enterprise partnerships, working with existing Enterprise partners and prospects to drive stronger value proposition and growing our Online Sellers partnerships, globally. • Reliable and scalable systems: continuing to improve our technology platform to enable operations at scale, lowering costs and enhancing security for our clients and shareholders. • Risk management: building trust through strong risk management across regulators, clients, bankers and partners. • People: greater emphasis to build our Global Operating Model so that our teams can serve customers locally and grow their global careers with OFX.

Annual Report 2021 | OFX Group Limited 41 Directors’ Report

Directors’ Report continued

10. Risks Information technology (IT) The Group depends on the performance, reliability The potential risks associated with the Group’s and availability of its technology platform and business are outlined below. This list does not cover communications systems. There is a risk that these every risk that may be associated with the Group, systems may be adversely affected by events including and the occurrence or consequences of some of the damage, equipment faults, power failure, computer risks described are partially or completely outside viruses, misuse by employees or contractors and/or the control of the Group, its Directors and senior external malicious interventions such as hacking, fire, management. There is also no guarantee or assurance natural disasters or weather interventions. Events of that the risks will not change or that other risks will not that nature may cause part of the Group’s technology emerge. platform, apps or websites to become unavailable. The Group’s operational processes or disaster recovery Regulatory compliance plans may not adequately address every potential event The international payments market is highly regulated. and its insurance policies may not cover loss or damage There is a risk that any new or changed regulations, that the Group suffers as a result of a system failure. for example, banking and financial services licensing This in turn could reduce the Group’s ability to generate regulations, could require the Group to increase its income, impact client service and confidence levels, spending on regulatory compliance and/or change increase cost burden, impact the Group’s ability to its business practices, which could adversely affect compete and cause damage to the Group’s reputation the Group’s profitability. There is a risk that such and, potentially, have a material adverse effect on its regulations could also make it uneconomical for financial position and performance. Further, there is the Group to continue to operate in places where it a risk that potential faults in the Group’s technology currently does business. platform could cause transaction errors that could result in legal exposure from clients, damage to There is a risk that the Group may not comply with the Group’s reputation or cause a breach of certain all applicable laws or have adequate compliance regulatory requirements (including those affecting procedures in place to manage or prevent breaches any required licence) and, potentially, have a material of applicable laws. There is also a risk that the Group adverse effect on the Group’s financial position and is required to pay significant penalties if it fails to performance. The Group maintains disaster recovery maintain or follow adequate procedures in relation to plans and controls to mitigate this risk. on-boarding of clients or to detect and prevent money laundering or financing of terrorism, or if it breaches anti-bribery laws or contravenes sanctions, as has been imposed on other companies by governmental authorities. In addition, there is a risk that evidence of a serious failure by the Group to comply with laws may cause one or more of the counterparty banks, partnerships or affiliates to cease business with the Group. The Group has a range of system and process controls in place to mitigate this risk and invests significant resources in compliance. All employees undertake compulsory compliance training on a regular basis.

42 Annual Report 2021 | OFX Group Limited Directors’ Report

Data security and privacy Relationships with banking counterparties The Group’s business relies on the effective processing The Group relies on banks to conduct its business, and storage of information using its core technologies particularly to provide its network of local and global and IT systems and operations. If the Group’s data bank accounts and act as counterparties in the security controls are ineffective, the Group’s IT systems management of foreign exchange and interest rate risk. could be exposed to cyber-attacks which may result There is a risk that one or more of these banks may in the unauthorised access to or loss of critical or cease to deal with the Group. The loss of a significant sensitive data, loss of information integrity, breaches banking relationship, or the loss of a number of of obligations or client agreements and website and banking relationships at the same time, particularly system outages. Any interruptions to these operations as the Group grows, could prevent or restrict the would impact the Group’s ability to operate and could Group’s ability to offer foreign exchange and payment result in business interruption, the loss of customers services in certain jurisdictions, increase operating and revenue, damaged reputation and weakening of costs for the Group, increase time taken to execute competitive position and could therefore adversely and settle transactions and reduce the Group’s ability affect the Group’s operating and financial performance. to internally net out transactions, all of which could The Group is subject to privacy laws in Australia and materially impact profitability. In addition, there is a other jurisdictions in which it conducts its business. risk that a loss or reduction in the services provided by The Group operations in the European Union are the Group’s banks could restrict its ability to actively required to comply with the European General Data manage its foreign exchange and interest rate risk in Protection Regulation. Similarly, the Group operations certain jurisdictions. As a result, the Group may have in North America are subject to relevant US and to increase the level of foreign exchange and interest Canadian laws, including the California Consumer rate exposure within existing operations, reduce or Privacy Act. In each of the relevant jurisdictions, these withdraw certain services it offers to clients or change laws generally regulate the handling of personal its business model to reduce the level of risk within the information and data collection. Such laws impact the business to acceptable levels, all of which could also way the Group can collect, use, analyse, transfer and materially impact profitability. The Group maintains a share personal and other information that is central to panel of banking counterparties and actively manages many of the services the Group provides. Any actual or its relationships with these counterparties. perceived failure by the Group to comply with relevant laws and regulations may result in the imposition of Mistaken payment fines or other penalties, client losses, a reduction in There is a risk that, due to system or human errors in existing services, and limitations on the development the processing of transactions, the Group may transfer of technology and services making use of such data. an incorrect amount of funds or transfer funds to an Any of these events could adversely impact the Group’s incorrect recipient. In these instances, the Group may business, financial condition and financial performance be required to take steps to recover the funds involved as well as cause reputational damage. The Group has and, in certain circumstances, be liable for amounts a range of system and process controls in place to paid that were in not in accordance with customer mitigate this risk pursuant to a Board-approved Cyber instructions. The Group has a range of system and Strategy. Employees undertake compulsory privacy and process controls in place to mitigate this risk. cyber security awareness training.

Annual Report 2021 | OFX Group Limited 43 Directors’ Report

Directors’ Report continued

Fraud Credit There is a risk that, if the Group’s services are used The Group enters into forward exchange contracts to transfer money in connection with a fraud or theft with some of its clients and its banking counterparties. (including identity theft), the Group may be required There is a risk that a client or counterparty fails to to take steps to recover the funds involved and may make payment upon settlement of these contracts. in certain circumstances be liable to repay amounts The Group mitigates against this risk by retaining the that it accepted for transfer, even after it has made the discretion to require that an advance payment is made, corresponding international payment. In some cases However, the Group remains exposed to the mark-to- the Group’s insurance does not indemnify for this loss. market value of the transactions. The Group has a range of fraud prevention controls in place to mitigate this risk. Competition The market for the provision of foreign exchange and Foreign exchange rate fluctuations payment services is highly competitive. The major Changes in value in currencies can affect the average existing competitors of the Group include banks, transaction size entered into by the Group’s clients money transfer organisations and other specialist and, potentially, the number of transactions. The providers. New competitors, services and business Group offers services in over 50 currencies and models which compete with the Group are likely movements in any of them may adversely impact to arise in the future. A substantial increase in the Group’s performance. In addition, as the Group competition for any of these reasons could result in the reports in Australian Dollars, a strengthening of the Group’s services becoming less attractive to consumer Australian Dollar against other currencies will also or business clients and/or partnerships, require the have a negative impact on the reported earnings of the Group to increase its marketing or capital expenditure Group that relate to its income earned in geographies or require the Group to lower its spreads or alter other outside Australia (which may increase over time, aspects of its business model to remain competitive, potentially substantially). Similarly, a weakening of the any of which could materially adversely affect the Australian Dollar as against USD, CAD, £, NZD, HKD and Group’s profitability and financial condition. A key SGD will have a negative impact on the costs of the aspect of the Group’s business model and competitive Group that relate to the costs incurred in geographies advantage is its ability to offer many clients more outside Australia. To mitigate against this risk, the attractive exchange rates and transaction fees than Group’s treasury risk management process monitors they regularly receive from competitors such as many and reports performance against defined limits. major banks. Competitors could potentially lower their Overall exposure of the Group is managed within limits spreads and transaction fees to compete with the set by the Board. Group, which could result in a reduction in, or slowing in the growth of, the Group’s transaction turnover, a reduction in margins, increased marketing expense or a failure to capture or reduction in market share. Any of these outcomes could materially impact the Group’s income and earnings. The Group regularly reviews its market position and competitiveness as part of its strategic and business planning process.

44 Annual Report 2021 | OFX Group Limited Directors’ Report

Intellectual property risk COVID-19 operational risk The Group relies on certain intellectual property (IP) Following the global outbreak of COVID-19, the Group such as trademarks, licences, software and proprietary enacted its Business Continuity plans and transitioned technology to conduct its business. There is a risk almost all of its global workforce to work from home that the actions taken by the Group to register and arrangements. Many of the Group’s key suppliers, protect its IP may not be adequate, complete or including its major banking counterparties, enacted enforceable, and may not prevent the misappropriation similar arrangements. As a result, no major disruption of the Group’s IP and proprietary information. If the to the Group’s services has occurred to date as a Group’s IP has been compromised, the Group may result of COVID-19 or the social distancing measures need to protect its rights by initiating litigation such put in place by governments globally to contain the as infringement or administrative proceeding, which virus. The Group’s priority remains taking care of its may be time consuming, unpredictable and costly. people and protecting its strong relationships with Any failure by the Group to protect its IP rights may customers and suppliers. There remains a risk the adversely impact the Group’s business, operations and virus and/or government measures to contain the future financial performance. There is a risk that the virus could further impact the Group’s employees Group may infringe the IP rights of third parties. Third and the availability of its key suppliers. The Group parties may enforce their IP rights and prevent the continues to monitor the situation closely and take Group from using the IP, which may adversely impact appropriate steps to ensure both the health and safety the business and operations of the Group, and damage of its employees and continuity of the Group’s services the reputation of the Group. To mitigate against this on an ongoing basis. risk the Group actively manages its trademarks and obtains licences in respect of third party IP rights used COVID-19 financial risk by the business. Given the ongoing uncertainties regarding the broader economic impacts of the COVID-19 pandemic (including Reputational damage uncertainties regarding the efficacy of the vaccination Maintaining the strength of the Group’s reputation is programs globally, the success of the fiscal measures important to retaining and increasing the client base undertaken by governments globally to date to mitigate and preserving healthy relationships with its regulators, against the economic effects of this pandemic and banks, partners and other stakeholders. There is a the future fiscal measures that will be undertaken in risk that unforeseen issues or events may adversely different regions), there remains a risk that COVID-19 affect the Group’s reputation. This may impact on the could have an impact on the foreign exchange flows of future growth and profitability of the Group. The Group the Group’s key customer segments and, therefore, on actively maintains its relationships with regulators, the Group’s turnover and revenue. The Group is closely banks, partners and other stakeholders to mitigate monitoring the situation and continues to proactively against this risk. plan for potential scenarios. Directors have considered the need to disclose the impact of COVID-19 on the Company’s operation and financial position to the ASX pursuant to Listing Rule 3.1, but determined that this was not necessary. The appropriateness of a specific disclosure will be assessed on an ongoing basis.

Annual Report 2021 | OFX Group Limited 45 Directors’ Report

Directors’ Report continued

11. State of affairs and significant changes in the state of affairs In the Directors’ opinion there have been no significant changes in the state of affairs of the Group during the year. A further review of matters affecting the Group’s state of affairs is contained on pages 38 to 41 in the Operating and Financial Review. 12. Events subsequent to balance date Refer to the share buy back disclosed in Note 19 to the Financial Report. We are delighted to announce we have agreed terms for a strategic investment in TreasurUp, a European treasury management software company, that will allow us to provide automated hedging and risk management solutions for small and medium size corporates to manage their F/X risk. OFX have agreed terms to invest in a minority stake in TreasurUp. The Company’s investment is expected to comprise €3.15 million in preference shares and €0.75 million in convertible debt, with projected close in 1H22.

13. Outlook The economic outlook remains uncertain however the Group continues to position OFX for growth and is focused on managing the Company well during these uncertain times by: • Servicing four core segments being Consumer, Corporate, Online Seller and Enterprise clients in all our key regions; • Continued investment in the client experience – both human and digital and reliable, scalable systems; and • Accelerating our medium-term growth through investments in Online Sellers and Enterprise.

We have a strong balance sheet, superior service delivery, an experienced and ambitious team and a clear mandate from our Board and our shareholders to grow sustainably.

On 12 March 2021, the Australian Treasurer announced the Government’s intention to amend the OBU regime, effectively removing the preferential tax rate of 10% on offshore income and closing the regime to new entrants.

OzForex Limited, a subsidiary of the Group, was declared an Offshore Banking Unit (OBU) on 10 October 2015 (refer to Note 4 Income Taxes). As an existing participant the concessional tax rate remains in effect for a period of two years ending in June 2023. Over this transition period the Government intends to put alternative measures in place to ensure activity remains in Australia once the grandfathering period ends. The Group structure will be reassessed to ensure it remains optimal and tax effective.

14. Likely developments and expected results While the impacts of foreign exchange market conditions make accurate forecasting challenging, particularly with continued uncertainty due to the COVID-19 pandemic, it is currently expected that the Group will experience NOI growth in FY22. The Group continues to focus on our core segments being Corporate, Online Seller, Enterprise and Consumer. We will invest and grow our Corporate and Online seller segments and expect growth in our Enterprise segment as we activate recent strategic alliance wins. The Consumer growth has been impacted in FY21 by the COVID-19 pandemic however we expect this segment to return to growth when the demand from this segment rebounds. We will continue our focus on geographic expansion, particularly in North America. The Australia and New Zealand region will be the largest single contributor of net profit for the Group. The group will invest to grow in our core segments. We will be increasing our investment in FY22 on our global operating model focused on payments excellence, risk management and customer service.

46 Annual Report 2021 | OFX Group Limited Directors’ Report

The Group’s short-term outlook remains subject to the range of challenges outlined in Section 10 (Risks), including market conditions, the impact of volatility in the foreign exchange markets, the cost of its client acquisition through online channels, potential regulatory changes and tax uncertainties. OFX is well positioned to deliver continued growth in the short to medium term.

15. Insurance and indemnification of Directors and officers The Directors of the Company and such other officers as the Directors determine are entitled to receive the benefit of an indemnity contained in the Constitution of the Company, to the extent allowed by the Corporations Act 2001 (Cth).

The Company has entered into a standard form deed of indemnity, insurance and access with the Directors, the Company and Secretary of the Company and with Directors and Officers of each Group entity against liabilities they may incur in the performance of their duties as Directors of the Company, to the extent permitted by the Corporations Act 2001 (Cth). The indemnity operates only to the extent that the loss or liability is not covered by insurance.

During the year the Company has paid premiums in respect of contracts insuring the Directors and Officers of the Company and each other Group entity against liability incurred in that capacity to the extent allowed by the Corporations Act 2001 (Cth). The terms of the policies prohibit disclosure of the details of the liability and the premium paid.

16. No officers are former auditors No officer of the Consolidated Entity has been a partner of an audit firm or a Director of an audit company that is the auditor of the Company and the Consolidated Entity for the financial year.

17. Non-audit services KPMG was appointed as the Company’s external auditor with effect from 14 October 2020, replacing PwC. In accordance with Section 327C of the Corporations Act 2001 (Cth) the appointment of KPMG as auditor of the Company and certain of its subsidiaries will be recommended by Directors for ratification at the Company’s Annual General Meeting on 26 August 2021.

The Company may decide to employ the external auditor on assignments additional to its statutory audit duties where the auditor’s expertise and experience with the Company and/or the Group are important.

The Audit, Risk and Compliance Committee is required to pre-approve all audit and non-audit services provided by the external auditor. The committee is not permitted to approve the engagement of the auditor for any non-audit services that may impair or appear to impair the external auditor’s judgement or independence in respect of the Company.

The Board has considered the non-audit services provided during the year by the auditor and, in accordance with written advice provided by resolution of the Audit, Risk and Compliance Committee, is satisfied that the provision of those non-audit services during the year by the auditor is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 (Cth) for the following reasons: • All non-audit services were subject to the corporate governance procedures adopted by the Group and have been reviewed by the Audit, Risk and Compliance Committee to ensure that they do not impact the integrity and objectivity of the auditor; and • The non-audit services provided do not undermine the general principles relating to auditor independence as set out in APES110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the Group, acting as an advocate for the Group or jointly sharing risks or rewards.

Annual Report 2021 | OFX Group Limited 47 Directors’ Report

Directors’ Report continued

Details of the amounts paid or payable to KPMG for audit and non-audit services provided during the year are set out in Note 24 to the Financial Statements. Total non-audit remuneration paid to KPMG is summarised below for FY21. All amounts listed for FY20 were paid to PwC as the Group’s auditor during the year.

2021 2020 $ $ Taxation services – 134,208 Other professional services 70,984 28,280 Total remuneration for non-audit services 70,984 162,488

18. Auditor’s Independence Declaration A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 (Cth) in relation to the audit for the year ended 31 March 2021 is on page 70 of this Report.

19. Chief Executive Officer/Chief Financial Officer declarations The Chief Executive Officer and the Chief Financial Officer have given the declarations to the Board concerning the Group’s Financial Statements and other matters as required under section 295A(2) of the Corporations Act 2001 (Cth).

20. Rounding off The Company is of the kind referred to in Australian Securities and Investments Commission Legislative Instrument 2016/191, relating to the rounding off of amounts in the Directors’ Report. In accordance with that Instrument, amounts in the Directors’ Report and the financial statements are rounded off to the nearest thousand dollars, unless otherwise stated.

48 Annual Report 2021 | OFX Group Limited Remuneration Report

Remuneration Report for the year ended 31 March 2021

Table of contents

The Remuneration Report is divided into the following sections:

Introduction 1. Key Management Personnel 2. Remuneration Framework and Link to Business Strategy 3. Company Performance FY21 4. Statutory Disclosures 5. Performance and remuneration outcomes for FY21 6. Loans to Executive KMP 7. Changes to Executive remuneration for FY22 8. Executive KMP Service Agreements 9. Remuneration Governance 10. Non-Executive Director remuneration 11. Additional Disclosures 12. Outlook

Annual Report 2021 | OFX Group Limited 49 Remuneration Report

Remuneration Report

Fellow Shareholders,

On behalf of your Board and as Chair of the Remuneration and Nomination Committee, I am pleased to present our remuneration Report for the year ended 31 March 2021. The purpose of this report is to outline OFX’s approach to remuneration for Executives and Non-Executive Directors and, in particular, the links between OFX’s remuneration framework, business performance and strategy.

The FY21 year in review • There will be no pool allocated for salary increases Over the last year, COVID-19 created unprecedented in FY22; and challenges globally and as a Company, OFX responded • There have been no increases to Non-Executive quickly and effectively for our clients, our investors Director fees. and our people. That response helped demonstrate the long-term financial sustainability of our business and it Remuneration changes in FY22 is a great credit to our people. The design of OFX’s remuneration framework promotes our strategic and operational objectives through the As outlined in both the Chairman’s and CEO’s letters, delivery of remuneration via short-term and long-term the OFX team managed both the highs and lows of incentive programs that: competing in a global payments environment over a sustained period of global economic uncertainty and 1. Drive alignment between the Company’s challenging trading conditions, but through that have management and its shareholders and other delivered a more valuable business and grown our stakeholders; areas of competitive advantage. The Company did not 2. Align to the economic environment as well as market take Australian Government JobKeeper payments and competitiveness; maintained discipline on expenses. Overall employee 3. Provide a clear link between Company performance engagement increased by 11%, reflecting the hard work and individual remuneration outcomes; of our leaders to support our global teams throughout 4. Ensure remuneration outcomes are aligned with this unprecedented period of uncertainty OFX’s short-term and long-term objectives; Remuneration outcomes for FY21 reflect the 5. Support effective governance and a strong risk performance of Executives to both protect and culture; and grow the Company and manage the needs of our 6. Attract the talent we need to underpin strategy clients, our shareholders, our people and the execution. communities in which we operate. The Global Executive team chose to defer their fixed remuneration increases To ensure that our incentive programs continue for six months from June to December 2020 due to the to meet these objectives, the Board appointed an impacts of COVID-19 on the business. In reflection of independent remuneration adviser to review and the FY21 performance, the following outcomes have recommend any changes to the design of both our been agreed: short-term and long-term incentive programs. As a • Short-term incentive funding was determined to be result of this review: 47.8% of target representing a reduction from the • The balanced scorecard used to determine STI FY20 outcome of 53%; funding will be adjusted in FY22 to reflect a 60% • There was no vesting of the Executive Share Plan weighting for financial metrics and a 40% weighting (ESP) in FY21; for non-financial metrics that are aligned to the strategic objectives of the Company and create

50 Annual Report 2021 | OFX Group Limited Remuneration Report

shareholder value as well as reflect our focus on effective risk management and sustainability; and • The loan-based Executive Share Plan will be retired and no new awards will be granted under this plan. New long-term incentives will be awarded under the Global Equity Plan where performance rights will be granted to Executives subject to a three-year performance period wherein performance rights will only vest if the performance conditions are met. Further detail of the changes to our short term and long-term incentive plans in FY22 are contained in the report. Overall, whilst performance throughout FY21 has fluctuated, we are pleased with our results given the challenging environment globally and we are encouraged by the momentum we saw in the business in the second half of the year. Remuneration outcomes reflect the Executive team’s success in both protecting the Company and positioning it for long-term sustainable growth.

Douglas Snedden Chair, Remuneration and Nomination Committee 18 May 2021

Annual Report 2021 | OFX Group Limited 51 Remuneration Report

Introduction The Directors present the Remuneration Report for the Company and its controlled entities (collectively the Group or OFX) for the financial year ended 31 March 2021 prepared in accordance with the requirements of the Corporations Act 2001 (Cth) (the Corporations Act) and as audited as required by section 308(3C) of the Corporations Act.

1. Key Management Personnel The Remuneration Report outlines the remuneration arrangements in place for the Key Management Personnel (KMP) of the Group, which comprises all Directors (Executive and Non-Executive) and those Executives who have authority and responsibility for planning, directing and controlling the activities of the Group. In this report ‘Executive KMP’ refers to members of the Group Executive Team that are KMP and includes Mr Skander Malcolm, as an Executive Director, Ms Selena Verth as Chief Financial Officer (CFO) and Mr Mark Shaw as Chief Operating Officer (COO).

The following table details the Group’s KMP during FY21 and up to the date of this report.

Name Role Non-Executive Directors Connie Carnabuci Non–Executive Director Lisa Frazier* Non–Executive Director Cathy Kovacs** Non–Executive Director Grant Murdoch Non–Executive Director Steven Sargent Chairman and Non–Executive Director Douglas Snedden Non–Executive Director

Executive Director

Skander Malcolm Managing Director and Chief Executive Officer (CEO)

Other Executive KMP

Selena Verth Chief Financial Officer (CFO)

Mark Shaw Chief Operating Officer (COO)

* Lisa Frazier resigned effective 19 May 2020 ** Cathy Kovacs was appointed effective 22 February 2021

52 Annual Report 2021 | OFX Group Limited Remuneration Report

2. Remuneration framework and link to business strategy

2.1 Remuneration strategy

Our Mission Our Strategy Our Remuneration Strategy

To be a trusted global • Our opportunity: we are currently To attract, retain and money provider for in the middle of a decade where our motivate the best people consumers and businesses, addressable share of a US$231 billion to drive a great culture that by combining the best cross-border payments revenue market delivers on our business of digital experience is opening rapidly to non-bank specialists. strategy and contributes with human support and • Our Vision: to be the world’s leading to sustainable long-term expertise. We solve for the value-added cross-border payments returns. complexity and anxiety of specialist. moving money globally – • Our competitive positioning: what enabling better decisions makes our competitive positioning and real savings. different is choices on two fronts: our distinctive customer value proposition (CVP) and the ‘moat’ we develop to sustain an advantage in the long run: • our distinctive CVP is to deliver a competitively priced and trusted experience, through both DIGITAL ease and with HUMAN support and expertise (our OFXperts), and • our strong ‘global moat’ is built upon a single scalable technology and operations platform that powers three superior capabilities: global payments, risk management and customer service. • Building a more valuable company: we seek to create increased value by investing in profitable growth, by maintaining a high recurring revenue and by growing revenue from Corporate and Enterprise clients faster than our Consumer clients.

Annual Report 2021 | OFX Group Limited 53 Remuneration Report

2.2 Remuneration principles

Culture Alignment to Competitive Simple and Sustainable performance transparent

Align reward Reward Attract, retain Simple structures Motivate Executives practices to performance and motivate with clear to deliver results effective risk that supports appropriately expectations. with both management, execution of qualified and short‑term and high our business experienced long-term horizons performance strategy and people who will at the same time and a diverse aligns Executive contribute to the demonstrating and inclusive and shareholder Group’s financial OFX’s values culture. interests. and operational through their performance. behaviours and actions.

2.3 Executive KMP remuneration components OFX’s Executive KMP remuneration consists of a total fixed remuneration (TFR) component, a short-term incentive (STI) component and a long-term incentive (LTI) component.

Total Fixed Remuneration (TFR) TFR is the sum of base salary and the value of guaranteed employee benefits such as superannuation.

Performance Conditions Remuneration Strategy

TFR takes into account the size and complexity Set to attract, retain and motivate the right talent of the role, as well as skills and experience of the to deliver on the Group’s strategy and contribute to Executive KMP. the Group’s financial and operational performance.

54 Annual Report 2021 | OFX Group Limited Remuneration Report

Short-Term Incentive (STI) Delivered as a combination of a cash award and deferred equity issued as performance rights.

Performance rights are issued under the Global Equity Plan as approved by shareholders at the 2018 Annual General Meeting.

Performance Conditions Remuneration Strategy

Calculated using: Annual ‘at risk’ incentive opportunity awarded on • Percentage of TFR; the achievement of performance conditions over a 12-month period. • Company performance measures; and • Individual performance measures. Performance conditions are clearly defined and measurable and designed to support the financial There is no overall Company financial gateway; and strategic direction of the Group which in turn however, the Board maintains absolute discretion translates into shareholder return. as to whether any STI awards will be paid. For FY21 the Company performance measures Company performance measures (financial and are largely determined by financial metrics with non-financial) are reviewed and reset by the Board one KPI set for Leadership and Culture based on annually with threshold/target/maximum levels set measurements including talent management, risk for each measure. management outcomes, Net Promoter Score (NPS) outcomes and employee engagement scores.

Company performance measures for FY21: Individual performance measures are specific to the • Underlying Earnings Before Tax (EBT) (40%) Executive KMP’s role. • Net Operating Income (NOI) (10%) Threshold/target/maximum level performance for • Strategic Investments (10%) each measure are set by the Board to provide a • Enterprise Deals (20%) challenging but purposeful incentive. The Board also has the discretion to adjust STI outcomes up • Leadership and Culture (20%). or down to be satisfied that individual outcomes Assessment of threshold/target/maximum levels are appropriate. follows agreed targets, with the vesting scale The part allocation of STI into deferred equity ranging from 50% through to 110%. directly aligns Executive KMP to shareholder Individual performance measures are equally interests. weighted and, along with evaluation of behaviour The number of the performance rights is determined against the OFX values, support an overall based on the Volume Weighted Average Price performance rating. (VWAP) for the Company’s shares for the five days immediately preceding the grant date.

Short-Term Incentive (STI) – Retention Rights Retention payments in the form of an equity grant were issued to Executives as a one-off incentive. This issuance represented a commitment made by the Board as a part of the unsolicited M&A proposal during FY20. This award vests 12 months from the date of the award.

Annual Report 2021 | OFX Group Limited 55 Remuneration Report

Long-Term Incentive (LTI) Executive Share Plan Options

Three-year incentive opportunity delivered through restricted Company shares – allocated upfront, pursuant to a non-recourse Company loan.

Note: A new LTI plan for Executives will be introduced in FY22. The loan share plan will be retired and replaced with a performance rights plan globally.

Performance Conditions Remuneration Strategy

Shares allocated in two tranches (50% in each tranche). Designed to encourage sustainable, long-term value creation and align Executive KMP with Vesting conditions: shareholders. Tranche 1: 5% EBITDA per share Compound Annual Growth Rate (CAGR) over three years. This form of incentive delivers immediate share ownership, linking a significant portion of Tranche 2: 10% Absolute Total Shareholder Return remuneration to OFX’s share price and returns (TSR) CAGR over three years. generated for shareholders.

Loan forgiveness is then granted as follows: Allocation of shares upfront aligns Executive KMP to shareholders from the grant date. The shares Tranche 1: are restricted and subject to risk of forfeiture • 10% forgiveness for 5% EBITDA CAGR; during the vesting/performance periods and • 20% forgiveness for 10% EBITDA CAGR; and while the loan remains outstanding and links remuneration to EBITDA as well as Absolute TSR. • 30% forgiveness for 15% EBITDA CAGR. • Further 1% loan forgiveness per 1% EBITDA The EBITDA per share CAGR and Absolute TSR CAGR >15%. CAGR performance conditions are designed to encourage Executive KMP to focus on the key Tranche 2: performance drivers which underpin sustainable • 10% forgiveness for 10% Absolute TSR CAGR; growth in shareholder value. The EBITDA per share • 20% forgiveness for 15% Absolute TSR CAGR; and CAGR provides a ‘counterbalance’ to the Absolute • 30% forgiveness for 20% Absolute TSR CAGR. TSR CAGR performance condition, designed to check that the quality of the share price growth is • % awarded is on a sliding scale supported by the Group’s earnings performance, Loan forgiveness is capped at 30%. and not market factors alone.

Executive KMP must either settle their loan at the Substantial benefit from the ESP is only achieved end of the loan period or surrender all shares in full through loan forgiveness. If the performance settlement of the loan. On settlement, shares will thresholds are not achieved there is no loan convert from restricted to ordinary. forgiveness and the Executive KMP has to repay the full loan amount, less any after-tax dividend payments applied against the loan.

2.4 Remuneration delivery and mix The Executive KMP remuneration mix is structured so that a substantial portion of remuneration is delivered as OFX securities through either deferred STI or LTI. The total remuneration correlates to performance. The following diagram (which is not to scale) sets out the remuneration structure and delivery timing for Executive KMP.

56 Annual Report 2021 | OFX Group Limited Remuneration Report

Remuneration delivery Year 1 Year 2 Year 3

1. Fixed Remuneration Salary and other benefits (including statutory super- 100% annuation)

2. STI Cash STI (Target is 115% of TFR for CEO and 60% of TFR for each other Executive KMP)

CEO EXECUTIVE KMP

50% 50% 30% 70%

12 months 12-month holding deferred lock post vesting vesting

CEO: 50% cash. KMP: 70% cash. 50% deferred into 30% deferred into performance rights. performance rights.

3. LTI Subject to Portion of loan may be forgiven at the end of the (92% of TFR for CEO and 40% of TFR for three-year three-year performance period according to the each other Executive KMP) performance schedule below: period FY21 FY21 issuance Tranche 1: in two tranches • 10% forgiveness for 5% EBITDA CAGR; • 20% forgiveness for 10% EBITDA CAGR; and • 30% forgiveness for 15% EBITDA CAGR. • Further 1% loan forgiveness per 1% EBITDA CAGR >15%. Tranche 2: • 10% forgiveness for 10% Absolute TSR CAGR; • 20% forgiveness for 15 % Absolute TSR CAGR; and • 30% forgiveness for 20% Absolute TSR CAGR.

FY20 • 10% forgiveness for 10% Absolute TSR CAGR; • 20% forgiveness for 15% Absolute TSR CAGR; and • 30% forgiveness for 20% Absolute TSR CAGR.

Annual Report 2021 | OFX Group Limited 57 Remuneration Report

Remuneration mix

FY21 Remuneration Outcomes1 The chart below reflects both the target mix of pay for each Executive KMP as well as actual mix of pay based on remuneration outcomes (i.e. the relative weight of each component as a percentage of total remuneration) for FY21.

CEO (Target) 32% 19% 19% 30%

CEO (Actual) 62% 19% 19%

CFO (Target) 50% 21% 9% 20%

CFO (Actual) 76% 17% 7%

COO (Target) 50% 21% 9% 20%

COO (Actual) 75% 17% 7%

0% 20% 40% 60% 80% 100%

Fixed STI (cash) STI Deferred LTI

3. Company performance FY21

5-year Group performance The Group’s FY17-FY21 annual financial performance measures compared with short-term and long-term remuneration outcomes set out below.

Performance Metrics2 2017 2018 20193 2020 2021 Net operating income4 $105.1m $109.9m $118.7m $125.2m $117.9m EBITDA $27.8m $29.8m $31.6m $36.9m $29.4m Underlying EBITDA $27.8m $29.8m $36.0m $38.2m $30.4m Basic earnings per share5 8.17cps 7.79cps 7.07cps 8.37cps 5.25cps Underlying basic earnings per share6 8.17cps 7.79cps 8.45cps 8.80cps 5.55cps Dividend per share7 $0.05900 $0.05800 $0.05640 $0.0563 $0.0316 Closing share price $1.48 $1.69 $1.67 $1.24 $1.10

1. Target mix accounts for partial loan forgiveness under the ESP for ‘on target’ performance. 2. These are not calculations based on constant currency. 3. FY19 information has been restated to conform with the presentation in the financial statements. 4. Net operating income, a non-IFRS measure, is the combination of ’Fee and trading income’ and ‘Fee and commission expense’ and ’Interest income’. 5. For the calculation of EPS refer to Note 6 of the financial statements. 6. Underlying basic earnings per share is the basic earnings per share calculation utilising the underlying NPAT of the Group. 7. This represents dividends distributed in the period.

58 Annual Report 2021 | OFX Group Limited Remuneration Report

4. Statutory disclosures

This table details the remuneration paid to Executives (KMP) and has been prepared in accordance with the accounting standards.

Post- Long Short-term employment -term benefits benefit benefits Share-based payments Cash Deferred LTI – salary Long STI – Executive and Cash Super- service Performance STI – Share Year fees bonus annuation leave Rights1 Retention Plan2 Total3 Current KMP S Malcolm 2021 664,731 210,937 21,521 8,703 189,329 74,382 40,941 1,210,544

(Restated)1,2,3 2020 657,379 228,131 20,885 6,633 189,816 – 97,553 1,200,397 S Verth 2021 372,397 88,488 21,521 3,330 36,633 85,525 10,435 618,329

(Restated)1,2,3 2020 367,813 86,932 20,885 1,413 36,988 – 24,352 538,383 M Shaw 2021 344,397 83,187 21,521 2,984 39,394 85,525 9,945 586,953

(Restated)1,2,3 2020 339,843 96,305 20,885 1,159 28,724 – 22,478 509,394 Total KMP remuneration 2021 1,381,525 382,612 64,563 15,017 265,356 245,432 61,321 2,415,826

(Restated)1,2,3 2020 1,365,035 411,368 62,655 9,205 255,528 – 144,383 2,248,174

1. The amounts for deferred STI – performance rights reflect the accounting expense on a fair value basis. The prior year STI – performance rights expense for each KMP differs from the reported figures in the FY20 Remuneration Report due to revisions in the valuation methodology and to certain assumptions applied. The figures reported in the FY20 Remuneration Report were: Mr Malcolm $70,670, Ms Verth $12,103, Mr Shaw $12,091 and total KMP STI remuneration of $99,864. The current reported figures for FY20 reflect an increase for each KMP of $119,146, $24,885 and $16,634 respectively and total KMP STI remuneration of $160,664. 2. The amounts for LTI – executive share plan reflect the accounting expense on a fair value basis. The prior year LTI – executive share plan expense for each KMP differs from the reported figures in the FY20 Remuneration Report due to revisions in the valuation methodology and to certain assumptions applied. The figures reported in the FY20 Remuneration Report were: Mr Malcolm $151,300, Ms Verth $37,555, Mr Shaw $34,714 and total KMP LTI remuneration of $223,569. The current reported figures for FY20 reflect a decrease for each KMP of $53,747, $13,203 and $12,236 respectively and total remuneration of $79,186. 3. The total remuneration expense for FY20 as reported in the FY20 Remuneration Report was $2,166,696. This has increased by $81,479 to $2,248,175 on account of the changes to STI and LTI as detailed in footnotes 1 and 2. Actual cash paid to each KMP has not changed as a result of this restatement.

5. Performance and remuneration outcomes for FY21

5.1 Fixed remuneration Regular reviews of remuneration levels are a key accountability of the Board, and a comprehensive market review was conducted for each Executive KMP in FY21 which resulted in the below amendments to base salary for Executive KMP in FY21. Executive KMP elected to defer their fixed remuneration increases for six months from 1 June 2020 to 1 December 2020 due to the impacts of COVID-19 on the business.

Name % increase S Malcolm 2.5 S Verth 2.6 M Shaw 4.6

The Board believes that these changes result in appropriate, market-competitive fixed remuneration for Executive KMP.

Annual Report 2021 | OFX Group Limited 59 Remuneration Report

5.2 Short-Term Incentive (STI)

The STI Plan is aligned to shareholder interests by: Encouraging Executive KMP to achieve Mandatory deferral of STI award into year-on-year performance in a balanced and performance rights acting as a retention sustainable manner through a mix of financial mechanism (50% deferred for CEO and 30% and non-financial performance measures. deferred for other Executive KMP).

Company Performance Individual Performance Target STI % TFR STI measures X measures X X = (TFR is Min = 0% Company performance base salary objectives set and Max = 132% outside reviewed by the Board annually Australia)

Payout Does not meet 1 0% Threshold 50% Mostly meets 2 75% Target 100% Meets 3 100% Max 110% Exceeds 4 110% Outstanding 5 120%

FY21 STI outcomes

Individual performance measures:

In determining individual STI awards, the CEO provides recommendations to the Remuneration and Nominations Committee in respect of the CEO’s direct reports (which includes all Executive KMP except the CEO). The Committee reviews these recommendations and evaluates the CEO’s performance and recommends to the Board any fixed pay changes and incentive awards for the CEO and Executive KMP. Recommendations take into account the STI pool funding percentage and the performance of the Executive KMP against individual and business performance goals as well as the behaviour demonstrated by the Executive KMP in their role consistent with the Company values. Individual Executive KMP goals align to the financial and operational objectives used to determine STI pool funding.

STI achieved by Executive KMP for FY21 is set out in the table below:

STI STI Company STI portion Executive at target Performance Individual STI achievement Cash deferred1 KMP $ Measures Performance achievement $ $ $ S Malcolm 802,348 47.8% 110% 52.8% 421,875 210,937 210,937 S Verth 240,416 47.8% 110% 52.8% 126,411 88,488 37,923 M Shaw 226,016 47.8% 110% 52.8% 118,839 83,187 35,652

1. STI deferred portion is calculated as STI achieved multiplied by STI remuneration delivery mix and is a non-statutory measure.

60 Annual Report 2021 | OFX Group Limited Remuneration Report

FY21 FY20 Bonus Pool Actual Actual Calculation Weighting $m Payout rate Funding1 $m YOY % Underlying EBT 40% 17.3 64.7% 25.3% 26.1 (33.7)% NOI 10% 117.9 0% 0% 125.2 (5.8)% Strategic Investments 10% See 25.0% 2.5% commentary Enterprise deals 20% See 50.0% 10.0% commentary Leadership and Culture 20% See 50.0% 10.0% commentary TOTAL 100% 47.8%

1. Funding rate is calculated as payout rate multiplied by company performance measures.

Company funding of 47.8% for STI for FY21 is a reduction in overall funding from FY20 STI funding. This reduction reflects Company performance against revised targets approved by the Board in June 2020 in the context of the uncertainty regarding the economic impact of the COVID-19 pandemic. As part of the revised STI targets approved by the Board, it was agreed that the payout rate for non-financial metrics would be capped at 50% achievement if targets were met. Funding for Strategic Investments includes the development of a single, scalable platform and 10% revenue growth in our Online Seller segment both of which will deliver quantifiable benefits for the business over the longer term. Funding for Enterprise Deals is based on target performance of signing two Enterprise clients whose expected revenue is >$500k in the first three years. Performance against the Leadership and Culture measure is based on steps taken by management to mitigate risks to the business during the period of the pandemic and to effectively manage the wellbeing and engagement of our people over this time. The Board considers the STI funding outcome for FY21 to be appropriate based on the balance of performance on financial and non-financial measures.

Held at Granted Vested Lapsed Held at 1 April during the during the during the 31 March STI 20201 year2 year year 2021 Current KMP S Malcolm 134,810 247,136 (134,810) – 247,136 S Verth 26,382 107,628 (26,382) – 107,628 M Shaw 25,139 110,564 (25,139) – 110,564

1. All holdings at 1 April 2020 were granted during FY20. Grants in FY21 occurred on 9 June 2020, with a 12-month vesting period and fair value at grant date of $1.32. 2. STI grants during the year include STI – retention, each granted to Mr Malcolm, Ms Verth and Mr Shaw in the amount of 80,398.

Annual Report 2021 | OFX Group Limited 61 Remuneration Report

Vested and Realised Remuneration:

The table below is a voluntary non-statutory disclosure of the realised remuneration of Executive KMP. Not all amounts have been prepared in accordance with accounting standards and this information differs from the statutory remuneration table in Section 4 which shows the expense for the vested and unvested awards in accordance with accounting standards. The below figures are unaudited.

Cash salary Cash Vested STI LTI – and fees bonus Superannuation deferral1 Executive Total Year $ $ $ $ Share Plan $ S Malcolm 2021 664,731 210,937 21,521 186,038 – 1,083,227 2020 657,379 228,131 20,885 280,017 – 1,186,412 S Verth 2021 372,397 88,488 21,521 36,407 – 518,813 2020 367,813 86,932 20,885 36,905 – 512,535 M Shaw 2021 344,397 83,187 21,521 34,692 – 483,797 2020 339,843 96,305 20,885 – – 457,033

1. These figures reflect the prior year STI deferred into share rights which have vested. These shares are subject to a holding lock under which they cannot be traded for 12 months from vesting date. The value is derived as the number of vested shares multiplied by the share price on vesting date

5.3 Long Term Incentive (LTI) – Executive Share Plan Options

How performance translates into LTI outcomes

The Executive Share Plan (ESP) is aligned to shareholder interests by: Encouraging Executive KMP to make EBIDTA Gateway and Absolute TSR CAGR business decisions that reflect long-term performance condition encourage Executive interests of the Company by enabling share KMP to focus on the key performance drivers ownership. Shares are restricted and subject which underpin sustainable growth in to risk of forfeiture during the vesting/ shareholder value with potential loan performance periods and while the loan forgiveness (on a sliding scale to a maximum remains outstanding. of 30%) for growth in Absolute TSR CAGR.

LTI Outcomes for FY21 No shares under the ESP vested in FY21 however Executive KMP were issued grants under the ESP for FY21 as outlined in the table below.

From FY19, as approved by shareholders at the Company’s AGM in August 2018, in order to reward good performance, part of the loan may be forgiven at the end of the three-year performance period upon the achievement of specified performance conditions.

From FY19 Executive KMP were offered a single grant of shares. The value of the grants is determined by reference to a set % of TFR. The number of shares that each Executive KMP received was determined using the following formula:

Fixed Remuneration x Grant % x Gross-up Factor (2) divided by the share acquisition price (being the five day VWAP for the period prior to and including 11/05/2019).

The Gross-up Factor replaced the previously used Fair Value Factor (Black-Scholes).

62 Annual Report 2021 | OFX Group Limited Remuneration Report

Australian Accounting Standards require the ESP awards be treated as options for accounting purposes due to the structure of the plan. The number and value of notional options held by Executive KMP under the ESP during the financial year ended 31 March 2021 is set out in the table below.

Fair value Vesting Expiry at grant Performance % LTI Issuances Grant date date date date1 achieved vested FY18 share-based loan 22 September 2017 7 June 2020 6 June 2022 0.65 No – FY19 share-based loan 22 June 2018 7 June 2021 6 June 2023 0.44 To be determined – FY20 share-based loan 2 September 2019 7 June 2022 6 June 2024 0.38 To be determined – FY21 share-based loan 28 August 2020 9 June 2023 9 June 2025 0.28 To be determined –

1. FY19 and FY20 fair values have been amended from prior year reported figures in the FY20 Remuneration Report to reflect the change in fair value calculation methodology and underlying assumptions. FY19 and FY20 fair values were previously reported as 0.53 and 0.30 respectively.

Total value of Granted Exercised Lapsed Held at options as at LTI Held at during during during 31 March grant date Issuances 1 April 2020 the year the year the year 2021 $ Current KMP S Malcolm 3,370,5321 937,352 – (1,877,166) 2,430,718 2,149,147 S Verth 591,3992 233,886 – (220,370) 604,915 373,720 M Shaw 342,8863 219,853 – – 562,739 200,996

1. Includes 1,877,166 shares granted in FY18 ESP, 691,603 shares granted in FY19 ESP and 801,763 granted in FY20 ESP. 2. Includes 220,370 shares granted in FY18 ESP, 170,985 shares granted in FY19 ESP and 200,044 granted in FY20 ESP. 3. Includes 158,209 shares granted in FY19 ESP and 184,677 granted in FY20 ESP.

6. Loans to Executive KMP The details of non-recourse loans provided to Executive KMP under the ESP during FY21 are set out below.

Under the ESP, Executive KMP acquire shares in the Company funded by a non-recourse loan from the Company. These loans are provided for the sole purpose of Executive KMP acquiring shares in the Company. The amount of the loan is equal to the issue price multiplied by the total number of shares issued. The loan is ‘interest free’ in that there is no annual interest charge to the participant on the loan. However, the notional value of this interest is taken into account in the overall structure of the program. The participant is obliged to pay a portion of the post-tax value of any dividends received during the loan term toward repayment of the loan amount. To access the shares, participants must repay their loan in full. Following the end of the vesting period, assuming the earnings ‘gateway’ is achieved, the participant can either repay the loan directly or sell some or all of their shares and apply the proceeds to repay the loan. Shares remain restricted until the loan is repaid, and it is important that the loan obligation is always taken into account alongside the face value of shares under the ESP awards.

Loans Highest Held at Advances lapsed Repayments Held at indebtedness 1 April during during during 31 March Interest during the 2020 the year the year the year 2021 free value year Name $ $ $ $ $ $ $ Current KMP S Malcolm 5,698,502 1,282,485 (3,229,404) (64,693) 3,686,890 903,894 6,980,988 S Verth 988,258 320,003 (379,153) (12,997) 916,111 156,138 1,308,261 M Shaw 559,529 300,803 – (9,515) 850,817 87,928 860,331

Annual Report 2021 | OFX Group Limited 63 Remuneration Report

7. Changes to Executive remuneration for FY22 In FY21, the Board undertook to review the remuneration plans for Executives given: • The complexity of the Executive Share Plan from both a participant and shareholder point of view; • The opportunity to better align performance metrics to Company strategy and shareholder experience; and • A desire to better align to market practice.

The Board appointed Guerdon Associates, a remuneration specialist firm, to review the current remuneration framework for Executives (including STI and LTI) and recommend any changes to the framework that would be valued by executives and supported by shareholders. As a result of this review, the Board approved changes to the performance metrics for Company funding for the Short-Term Incentive Plan as well as the design and performance metrics for the Long-Term Incentive Plan for Executives. Key changes are summarised in the tables below:

FY22 STI performance metrics and weightings for Company funding of STI:

Performance metric Weighting Rationale

Net Operating Income 30% Retained as a key performance metric to reflect the Company’s focus on revenue growth

Earnings before interest, 30% EBITDA is a good proxy for cash from operations and is a key metric for tax, depreciation and investors on how the business is performing amortisation (EBITDA)

Strategic investments 20% Measures aligned to the strategic objectives of the Company and which create shareholder value including key strategic investments related to the growth of long-term sustainable revenue

Risk and ESG 20% Measures for effective risk management as well as ESG measures relevant to our various stakeholders

FY22 LTI Plan key characteristics:

FY22 LTI Plan feature Detail

Purpose of the LTI Plan Motivate and retain Executives by providing awards that align with longer-term Company performance and shareholder outcomes

LTI potential by CEO 92% of TFR Executive Other Executive KMP 40% of TFR

Performance Metrics Earnings per Share (normalised) compound annual growth rate (50% weighting): 50% of the FY22 LTI grant. EPS calculated as normalised net profit divided by the weighted average number of ordinary shares.

Absolute Total Shareholder Return compound annual growth rate (50% weighting): 50% of the FY22 LTI grant. Absolute total shareholder return calculated as the shareholder return taking into account the change in share price and dividends.

Performance period Three (3) years

64 Annual Report 2021 | OFX Group Limited Remuneration Report

FY22 LTI Plan feature Detail

Award determination Each 50% tranche of share rights operates independently. At the end of the performance period, final vesting percentages will be determined via a Board and Committee review, recommendation and approval process. The Board and the Committee have authority and discretion to adjust LTI vesting % and individual awards, including to 0% of grant if appropriate.

Share rights grant The number of performance share rights will be determined by dividing the grant value by calculation a 10-day VWAP following the release of full year results. The Committee and Board believe using a VWAP (instead of the share price at a single point in time or a discounted fair value methodology) reduces the impact daily volatility may have on the number granted and provides greater transparency around the value of performance share rights granted.

Treatment of dividends Dividends will not be earned or payable on unvested performance share rights.

Payment method Grant of share rights. Vested share rights entitle the holder to ordinary shares in the Company for nil consideration. The Company retains discretion to satisfy vested share rights delivered through the LTI plan via the issuance of new shares or via an on-market purchase.

Treatment of terminating Eligibility for an LTI grant or award is contingent on active, continuous employment Executive KMP throughout the vesting period. In the event of resignation/termination, unvested share rights lapse except as provided at the discretion of the Board.

Change of control The Board has discretion.

8. Executive KMP service agreements

Contractual arrangements for Executive KMP

The key employment terms and conditions for Executive KMP as at 31 March 2021 are set out below.

Contract Components CEO Other Executive KMP

Basis of contract Ongoing (no fixed term) Ongoing (no fixed term)

Notice period 6 months 6 months

Post-employment Maximum 6 months post-employment non- Maximum 12 months month post-employment non- restraints compete and non-solicitation restraint compete and non-solicitation restraint

Treatment of STI Upon termination, if the CEO is considered Upon termination, if the Executive KMP is and LTI a good leaver, the CEO will be entitled to a considered a good leaver, the Executive KMP may pro-rata STI award. Board discretion applies be entitled to a pro-rata STI award. Board discretion to the treatment of any unvested LTI. applies to the treatment of any unvested LTI.

Annual Report 2021 | OFX Group Limited 65 Remuneration Report

9. Remuneration Governance

9.1 Role of the Remuneration and Nomination Committee The Remuneration and Nomination Committee is responsible for reviewing and making recommendations to the Board on the Company’s remuneration packages for Non-Executive Directors, the CEO, and Executives. It is also responsible for reviewing the Company’s recruitment policies, superannuation arrangements, Board and Executive succession planning and performance evaluations among other things. The Charter of the Remuneration and Nomination Committee is available on the Group’s website at www.ofx.com/en-au/investors/corporate-governance/.

To assist in performing its duties, the Remuneration and Nomination Committee seeks independent advice from external consultants on various remuneration related matters. The Remuneration and Nomination Committee follows protocols around the engagement and use of external remuneration consultants to ensure compliance with relevant legislation as it relates to Executive remuneration.

During the 2021 financial year, Guerdon Associates were engaged to provide advice on Executive Remuneration relating to STI and LTI and recommend any changes to the framework that would be valued by Executives and supported by shareholders.

The Board is satisfied that the recommendations received from the remuneration consultants were free from undue influence from the KMP to whom the recommendations relate and in accordance with section 9B of the Corporations Act 2001 (Cth).

Further, the following arrangements were made to meet this requirement: • The remuneration consultants were engaged by and reported to the Remuneration and Nomination Committee on behalf of the Board; • The advice containing the remuneration recommendations was provided by the remuneration consultants directly to the Chair of the Remuneration and Nomination Committee; and • The remuneration recommendations made by external advisers to the Remuneration and Nomination Committee and the Board were used as an input to decision making only.

The total fees paid to external advisers for remuneration recommendations included $28,374 (including GST) paid to Guerdon Associates.

9.2 Board discretion The Company has a structured and objective approach to remuneration. However, the Remuneration and Nomination Committee and the Board are able to exercise judgement and discretion as is required to provide remuneration outcomes for Executive KMP that appropriately reflect the performance of the Group and the achievement of real and tangible results that are consistent with the Group’s strategic priorities, are in line with Group values, and enhance shareholder value.

9.3 Cessation of employment Participants are not eligible for any STI cash payment or any deferred STI which are subject to restriction if they are terminated due to misconduct or poor performance, nor in general, if they resign or retire without a managed transition approved by the Board. In certain appropriate circumstances, allowed for under Executive Service Agreements, the Board may deem an Executive KMP to be a ‘good leaver’ and exercise discretion to allow eligibility for a pro-rata cash payment in respect of the current performance year and may determine that deferred STI previously awarded is retained.

In general, all ESP shares are forfeited and surrendered in full settlement of the loan if a participant ceases employment prior to the end of the performance period. The Board, however, has absolute discretion in appropriate circumstances to deem an Executive KMP to be a ‘good leaver’ and determine that some or all of a participant’s ESP share awards be retained.

66 Annual Report 2021 | OFX Group Limited Remuneration Report

9.4 Malus and clawback The Board retains wide discretion to adjust formulaic incentive outcomes up or down (including to zero) prior to their finalisation. Malus refers to the exercise of downward discretion. Clawback refers to the Board’s power to recover awards or payments that have been made, granted or vested (including the forfeiture of vested equity awards, or the demand of the return of shares or the realised cash value of those shares) where the Board determines that the benefit obtained was inappropriate (for example, as a result of fraud, dishonesty or breach of employment obligations by the recipient or any employee of the Group). The Board has not encountered circumstances in this or prior periods that have required the application of the clawback provisions.

9.5 Change of control If a change of control occurs prior to the vesting of share rights that are not subject to performance hurdles the Board has discretion to bring forward vesting dates where it considers it appropriate to do so. If a change of control occurs prior to the vesting of STI or LTI that is subject to performance hurdles, the Board has discretion to determine that some or all of the unvested shares will vest. In exercising this discretion, the Board may have regard to any matter the Board considers relevant, including the extent to which the vesting conditions have been satisfied (or estimated to have been satisfied) at the time the change of control occurs or the proportion of the performance period during which the vesting conditions are tested has passed at the time the change of control occurs.

9.6 Minimum shareholding requirements for Non-Executive Directors A minimum shareholding requirement for Non-Executive Directors was introduced in FY19. The minimum shareholding requirement seeks to align the interests of the Board and shareholders with a minimum shareholding requirement for Non-Executive Directors. Each Non-Executive Director must establish and maintain a level of share ownership equal to one times the Non-Executive Director annual base fee. For the purposes of calculating the minimum holding, this does not include any higher fee for acting as Chair or for membership of any Board Committees. The minimum holding must be reached within three years of appointment. At the date of this Remuneration Report, all Non-Executive Directors either met the minimum requirement or were on track to meet it within the required time.

9.7 Securities Trading Policy All Directors and employees are required to comply with the Group’s Securities Trading Policy in undertaking any trading in the Company’s shares and may not trade if they are in possession of any inside information. Directors, members of the Global Executive Team, members of the Senior Leadership Team, members of the Finance Team and Specified Employees must apply for and receive written approval before trading in OFX securities. All employees are prohibited from dealing in OFX securities during a Closed Period which precedes the release of the half year and full year results and the annual meeting. The Policy prohibits employees who participate in any equity-based plan from entering into any transaction in relation to unvested securities which would have the effect of limiting the economic risk of an unvested security.

Annual Report 2021 | OFX Group Limited 67 Remuneration Report

10. Non-Executive Director remuneration

10.1 Fee framework The Board seeks to set fees for the Non-Executive Directors that reflect the demands which are made on and the responsibilities of the Directors, and at a level which will attract and retain Directors of the highest quality.

Non-Executive Director fees will be reviewed from time to time and they may seek the advice of external remuneration advisers for this purpose. There were no changes in fees for Non-Executive Directors during FY21.

10.2 Fee pool The maximum payable to be shared by all Non-Executive Directors is currently set at $1,000,000 per annum, which was approved by shareholders in General Meeting prior to the Company’s listing on the ASX in 2013. To preserve independence, Non-Executive Directors do not receive any equity as part of their remuneration and do not receive any performance-related compensation. Non-Executive Directors receive superannuation contributions where required by Superannuation Guarantee legislation.

Fees applicable for FY21

Role $ Chairperson fee 200,000 Base Director fee 100,000 Committee Chair fee 25,000 Subsidiary Chair fee 20,000 Committee Member fee 15,000

Statutory Non-Executive Director fees for the year ended 31 March 2021 Details of the fees paid to the Non-Executive Directors for the year ended 31 March 2021 are outlined below: Short-term Post-employment employee benefits benefits Cash salary and fees Superannuation Total Non-Executive Directors Year $ $ $ C Carnabuci 2021 105,023 9,977 115,000 2020 105,023 9,977 115,000 L Frazier1 2021 19,787 1,880 21,667 2020 118,722 11,278 130,000 C Kovacs2 2021 11,795 1,120 12,915 2020 – – – G Murdoch 2021 114,155 10,845 125,000 2020 114,155 10,845 125,000 S Sargent 2021 210,046 19,954 230,000 2020 210,046 19,954 230,000 D Snedden 2021 127,854 12,146 140,000 2020 127,854 12,146 140,000 Total Non-Executive Director 2021 588,660 55,922 644,582 Remuneration 2020 675,800 64,200 740,000

1. Resigned effective 19 May 2020. 2. Hired effective 22 February 2021.

68 Annual Report 2021 | OFX Group Limited Remuneration Report

Directors’ shareholdings Details of the Directors’ and their affiliates’ shareholdings in OFX Group Limited are set out below:

Opening Closing Type balance Issued Acquired Lapsed balance C Carnabuci Ordinary 19,332 – – – 19,332 L Frazier Ordinary 54,645 – – – 54,645 C Kovacs Ordinary – – – – – S Malcolm Ordinary 3,598,592 1,152,5601 117,900 (1,877,166)2 2,991,8863 G Murdoch Ordinary 245,000 – 100,000 – 345,000 S Sargent Ordinary 100,000 – 18,444 – 118,444 D Sneddon Ordinary 100,000 – – – 100,000

1. Shares issued to Mr Malcolm during FY21 comprise: • 134,810 ordinary shares issued upon vesting of FY19 STI. These shares are subject to a 12-month holding lock. • 937,352 ordinary shares issued under the Executive Share Plan as FY21 LTI incentive, subject to vesting conditions. These shares are restricted until performance measures have been met and the corresponding loan in respect of those shares has been repaid. These shares were reallocated from shares issued on 22 September 2017 pursuant to the Executive Share Plan which were subject to vesting conditions, did not vest and were forfeited on 7 June 2020 in accordance with the terms of the Executive Share Plan. No new shares were issued. • 80,398 fully paid ordinary shares were newly issued on 1 September 2020 as a retention award pursuant to the OFX Global Equity Plan. These shares are subject to a vesting condition. 2. Shares issued to Mr Malcolm on 22 September 2017 pursuant to the Executive Share Plan were subject to vesting conditions. These shares did not vest and lapsed on 7 June 2020 in accordance with the terms of the Executive Share Plan. 3. Total ordinary shares held by Mr Malcolm comprise 2,430,718 issued ordinary shares under LTI, 480,770 issued ordinary shares by way of personal holdings and vested STI, and 80,398 shares issued as a retention award. In addition, Mr Malcolm holds STI performance rights of 166,738.

11. Additional Disclosures

Transactions of KMP Shares held in the Company by KMP at the end of the financial year, excluding shares granted under the ESP and STI, are set out below.

Held at Held at 1 April Other 31 March 2020 Acquisitions movements 2021 Current KMP S Malcolm 55,210 117,900 – 173,110 S Verth 5,800 – – 5,800 M Shaw 52,222 – – 52,222

12. Outlook The Group will continue to review and adjust its reward mechanisms annually, as required, to ensure that its long- term growth aspirations are met. This Directors’ Report is made in accordance with a resolution of Directors. On behalf of the Board, 18 May 2021.

Steven Sargent Skander Malcolm Chairman Chief Executive Officer and Managing Director 18 May 2021 18 May 2021

Annual Report 2021 | OFX Group Limited 69 Auditor’s Independence Declaration Auditor’s Independence Declaration

kpmg

Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001

To the Directors of OFX Group Limited

I declare that, to the best of my knowledge and belief, in relation to the audit of OFX Group Limited for the financial year ended 31 March 2021 there have been: i. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and ii. no contraventions of any applicable code of professional conduct in relation to the audit.

KPMG Shaun Kendrigan Partner Sydney 18 May 2020

KPMG, an Australian partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Liability limited by a scheme The KPMG name and logo are trademarks used under license by approved under Professional the independent member firms of the KPMG global organization. Standards Legislation.

70 Annual Report 2021 | OFX Group Limited Consolidated Statement of Comprehensive Income Consolidated Statement of Comprehensive Income for the year ended 31 March 2021

2021 2020 Notes $’000 $’000 Fee and trading income 2 134,232 137,235 Fee and commission expense 2 (16,762) (13,187) Net income 117,470 124,048

Interest and other income 2 460 1,106 Net operating income 117,930 125,154

Employment expenses 3 (57,992) (53,414) Promotional expenses (12,794) (13,632) Information technology expenses (6,303) (6,273) Occupancy expenses (678) (700) Bad and doubtful debts (1,951) (3,331) Other operating expenses 3 (8,779) (10,869) Earnings before interest expense, tax, depreciation and amortisation 29,433 36,935 (EBITDA) Depreciation and amortisation expense 12, 13, 16 (11,745) (10,521) Interest expense (1,359) (1,647) Net profit before income tax 16,329 24,767 Income tax expense 4 (3,548) (4,436)

Net profit attributable to ordinary shareholders 12,781 20,331

Other comprehensive income Other comprehensive income that may be reclassified to profit and loss Exchange differences on translation of foreign operations, net of hedging (1,303) 66 Total comprehensive income attributable to ordinary shareholders 11,478 20,397

Earnings per share attributable to ordinary shareholders Cents Cents Basic 6 5.25 8.37 Diluted 6 5.10 8.16

The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

Annual Report 2021 | OFX Group Limited 71 Consolidated Statement of Financial Position Consolidated Statement of Financial Position as at 31 March 2021

2021 2020 Notes $’000 $’000 ASSETS Cash held for own use 7 33,454 28,771 Cash held for settlement of client liabilities 7 241,807 207,038 Deposits due from financial institutions 7 27,119 32,276 Derivative financial assets 9 22,546 35,094 Prepayments 4,680 3,144 Other receivables 8 5,037 7,071 Property, plant and equipment 12 1,054 2,279 Intangible assets 13 18,048 14,832 Right-of-use assets 16 13,899 17,211 Current tax assets 6,273 4,015 Deferred tax assets 5 – 2,099 Total assets 373,917 353,830

LIABILITIES Client liabilities 7, 8 247,094 211,908 Derivative financial liabilities 9 16,733 32,656 Lease liabilities 16 17,302 21,143 Other creditors and accruals 14 4,261 6,520 Provisions 15 6,059 5,616 Deferred tax liabilities 5 1,239 – Total liabilities 292,688 277,843

Net assets 81,229 75,987

EQUITY Ordinary share capital 18 28,990 28,774 Retained earnings 51,493 46,502 Foreign currency translation reserve (1,230) 73 Share-based payments reserve 1,976 638 Total equity attributable to shareholders 81,229 75,987

The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.

72 Annual Report 2021 | OFX Group Limited Consolidated Statement of Changes in Equity Consolidated Statement of Changes in Equity for the year ended 31 March 2021

Foreign currency Share-based Ordinary Retained translation payments Total share capital earnings reserve reserve equity Notes $’000 $’000 $’000 $’000 $’000 Balance at 31 March 2019 29,113 40,155 7 374 69,649 Net profit – 20,331 – – 20,331 Other comprehensive income – – 66 – 66 Total comprehensive income – 20,331 66 – 20,397 Transactions with shareholders in their capacity as shareholders: Acquisition of shares (339) – – – (339) Dividends paid 19 – (13,984) – – (13,984) Expenses related to share 22 – – – 264 264 based payments Subtotal (339) (13,984) – 264 (14,059) Balance at 31 March 2020 28,774 46,502 73 638 75,987 Net profit – 12,781 – – 12,781 Other comprehensive income – – (1,303) – (1,303) Total comprehensive income – 12,781 (1,303) – 11,478 Transactions with shareholders in their capacity as shareholders: Shares issued under 216 – – – 216 employee share scheme Dividends paid 19 – (7,790) – – (7,790) Expenses related to share 22 – – – 1,338 1,338 based payments Subtotal 216 (7,790) – 1,338 (6,236) Balance at 31 March 2021 28,990 51,493 (1,230) 1,976 81,229

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.

Annual Report 2021 | OFX Group Limited 73 Consolidated Statement of Cash Flows Consolidated Statement of Cash Flows for the year ended 31 March 2021

2021 2020 Notes $’000 $’000 Cash flows from operating activities Profit from ordinary activities after income tax 12,781 20,331 Adjustments to profit from ordinary activities Depreciation and amortisation 11,745 10,521 Interest expense 1,359 1,647 Movement in share-based payment reserve 1,338 264 Foreign exchange revaluation 5,151 58 Fair value changes on financial assets and liabilities through profit or loss (3,375) 261 Movement in foreign currency translation reserve (1,303) 66 Operating cash flow before changes in working capital 27,696 33,148

Changes in assets and liabilities Decrease/(Increase) in prepayments and other receivables 497 (3,827) Decrease/(Increase) in deferred income tax assets 2,099 (1,893) (Increase) in cash held for settlement of client liabilities (34,769) (51,887) Increase in amounts due to clients 35,186 54,714 (Decrease)/Increase in accrued other creditors and accruals (2,259) 2,064 Increase/(Decrease) in deferred income tax liabilities 1,239 (379) Increase/(Decrease) in provisions 443 (216) (Increase) in current tax assets (2,258) (1,219) Net cash flows from operating activities 27,874 30,50 30,505 5

Cash flows from investing activities Payments for property, plant and equipment 12 (148) (972) Payments for intangible assets 13 (10,265) (9,309) Decrease in cash deposited with financial institutions 5,157 181 Net cash flows from investing activities (5,256) (10,100)

Cash flows from financing activities Payments for lease liabilities 16 (5,200) (3,365) Proceeds from sale/(Payments for acquisition) of shares 216 (339) Dividends paid 19 (7,790) (13,984) Net cash flows from financing activities (12,774) (17,688) Net increase in cash held for own use 9,844 2,717 Cash held for own use at the beginning of the year 28,771 26,112 Exchange gains on cash held for own use (5,161) (58) Cash held for own use at the end of the year 7 33,454 28,771

Including cash held for settlement of client liabilities (classified as operating activities) Cash held for settlement of client liabilities at the beginning of the year 207,038 155,151 Cash inflows from clients 24,894,379 24,556,639 Cash outflows to clients (24,869,578) (24,501,554) Exchange loss/(gain) on cash held for client liabilities (9,968) (3,198) Cash held for settlement of client liabilities at the end of the year 7 241,807 207,03 207,038

Total cash and cash equivalents 7 275,261 235 235,8099

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

74 Annual Report 2021 | OFX Group Limited Notes to the Financial Statements Notes to the Financial Statements for the year ended 31 March 2021

About this Report

OFX Group Limited (the Group or the Company) is a company limited by shares, incorporated and domiciled in Australia. Its shares are publicly traded on the Australian Securities Exchange. This financial report presents the consolidated performance, position and cash flows of the Group for the year ended 31 March 2021 and was approved and authorised for issue by the Board of Directors on 18 May 2021. The Group is for-profit for the purpose of preparing the financial statements. The accounting policies explained in this report are consistent for all the periods presented unless otherwise stated. The Directors have the power to amend and reissue the financial report. The financial report is a general purpose financial report which: • Is prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001 (Cth). Consequently, this financial report has also been prepared in accordance with and complies with IFRS as issued by the IASB; • Has been prepared under the historical cost convention except for derivatives and share-based payments which are measured at fair value; and • Is presented in Australian dollars with all values rounded to the nearest thousand dollars in accordance with ASIC Legislative Instrument 2016/191 unless otherwise indicated.

Critical estimates and judgements Preparing the financial report requires judgement in applying the accounting policies and calculating certain critical accounting estimates. The Group’s critical accounting estimates and significant judgements are: • Fair value of certain financial instruments (Note 9 and Note 10) • Estimated credit losses on receivables (Note 11(c)) • Share-based payments (Note 22) • Leases (Note 16)

The COVID-19 pandemic created economic uncertainty resulting in changes to cross-border payment flow activity; impacting all regions. Following the global outbreak of COVID-19, the Group enacted its Business Continuity plans and transitioned almost all of its global workforce to work from home arrangements. Many of the Group’s key suppliers, including its major banking counterparties, enacted similar arrangements. As a result, no major disruption to the Group’s services has occurred to date. There remains a risk the virus and/or government measures to contain the virus could further impact the Group’s employees and the availability of its key suppliers. The Group has and will continue to closely monitor the situation. There has been no significant impact on estimates and key judgements as a result.

Basis of consolidation The consolidated financial report comprises the assets and liabilities of all subsidiaries of the Group as at 31 March 2021 and the results of all subsidiaries for the year then ended. A list of controlled entities at year end is contained in Note 21.

Subsidiaries are all those entities over which the Group has the power to direct the relevant activities, exposure to significant variable returns and the ability to utilise power to affect the Group’s own returns. The determination of control is based on current facts and circumstances and is continuously assessed.

Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.

Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Investments in subsidiaries are accounted for at cost in the separate financial statements of OzForex Limited (the intermediate holding company) in accordance with AASB 127 Separate Financial Statements.

Annual Report 2021 | OFX Group Limited 75 Notes to the Financial Statements

Functional and presentation currency Foreign operations are measured in the Group’s financial statements using the currency of the primary economic environment in which the foreign operation operates (the functional currency). The functional currencies of overseas subsidiaries are listed in Note 21.

The Group’s financial statements are presented in Australian dollars, which is the Group’s presentation currency.

GST Revenues, expenses and fixed assets are recognised net of the associated GST, unless the GST is not recoverable from the relevant taxation authority. Receivables and creditors are presented including the GST. The net GST recoverable from, or payable to, each taxation authority is presented in other receivables or other payables.

Cash flows are presented including GST. The GST components of the cash flows arising from investing or financing activities which are recoverable from, or payable, to the taxation authority are presented as operating cash flows.

New standards and interpretations not yet adopted Certain new accounting standards and interpretations have been published that are not mandatory for 31 March 2021 and have not been early adopted by the Group. These standards are not expected to have a material impact on the Group’s financial statements.

Segment Information

Note 1. Segment Information The operating segments presented below reflect how senior management and the Board of Directors (the chief operating decision makers) allocate resources to the segments and review their performance.

The chief operating decision makers examine the performance both from a product and geographic perspective and have identified five reportable segments.

The two products are international payment services and international payment solutions: • International payment services are monitored by geographic region (based on client location) and provide bank to bank currency transfers servicing businesses and consumers. • International payment solutions provide strategic partners with a package which includes: OFX IT platform; client service; compliance; banking relationships; and payments capabilities.

76 Annual Report 2021 | OFX Group Limited Notes to the Financial Statements

Segments are managed on an underlying basis. Segment EBITDA excludes $1.0 million (2020: $1.3 million) of one‑off expenses/non-operating.

Segment fee and trading income – 2021 v 2020 ($’000) International payment services $160,000 $137,235 $140,000 $134,232

$120,000

$100,000

$80,000 $68,271 $67,331 $60,000 $35,455 $40,000 $33,698 $20,473 $24,574 $20,000 $5,517 $6,888 $4,525 $4,744 $0 A&NZ Europe North America Asia International Total payment solutions 2021 2020

Segment EBITDA – 2021 v 2020 ($’000) International payment services $45,000 $40,000 $38,249 $35,000 $30,401 $30,000

$25,000 $21,145 $20,000 $16,235 $15,000

$10,000 $8,319 $7,169 $4,816 $4,776 $5,000 $2,304 $477 $1,705 $1,734 $0 A&NZ Europe North America Asia International Total payment solutions 2021 2020

2021 2020 $’000 $’000 Group underlying EBITDA 30,401 38,249 Depreciation and amortisation (11,745) (10,521) Interest expense (1,359) (1,647) Net profit before income tax 17,297 26,081 Income tax expense (3,548) (4,436) One-off expenses/non-operating (968) (1,314) Net profit 12,781 20,331

Annual Report 2021 | OFX Group Limited 77 Notes to the Financial Statements

Australia International and New North payment Zealand Europe America Asia solutions Consolidated $’000 $’000 $’000 $’000 $’000 $’000 2021 Segment assets 193,442 78,328 80,967 37,402 – 390,139 Intergroup eliminations (4,159) – (12,063) – – (16,222) Deferred tax assets – Total assets 373,917

Segment liabilities (142,008) (71,037) (65,165) (29,461) – (307,671) Intergroup eliminations – 7,066 – 9,156 – 16,222 Deferred tax liabilities (1,239) Total liabilities (292,688)

2020 Segment assets 230,595 42,986 82,008 28,549 – 384,138 Intergroup eliminations – (17,116) – (15,291) – (32,407) Deferred tax assets 2,099 Total assets 353,830

Segment liabilities (183,062) (37,663) (69,422) (20,103) – (310,250) Intergroup eliminations 6,266 – 26,141 – – 32,407 Deferred tax liabilities – Total liabilities (277,843)

78 Annual Report 2021 | OFX Group Limited Notes to the Financial Statements

Results for the Year

Note 2. Net Operating Income

Fee and trading income Fee and trading income consists of the foreign currency transaction margins and fees, as well as changes in exchange rates between the time a client rate is agreed and a subsequent hedge transaction is entered into by the Group.

Fee and trading income is presented inclusive of realised and unrealised income earned from the sale of foreign currency contracts to clients.

Fee and commission expenses Fee and commission expenses are transactional banking fees and commissions paid to strategic and referral partners.

Interest income Interest income is recognised using the effective interest rate method, which spreads fees and costs associated with an interest bearing receivable across its life.

2021 2020 $’000 $’000 Realised margin and fees on foreign exchange contracts 129,361 137,242 Unrealised gains on foreign exchange contracts 684 1,709 Revaluation of foreign exchange assets and liabilities 4,187 (1,716) Fee and trading income 134,232 137,235

Fee and commission expense (16,762) (13,187) Net income 117,470 124,048

Interest and other income 460 1,106 Net operating income 117,930 125,154

Annual Report 2021 | OFX Group Limited 79 Notes to the Financial Statements

Note 3. Expenses

2021 2020 $’000 $’000 Employment expenses Salaries and related costs including commissions (50,537) (47,291) Share based payments (1,553) (271) Defined contribution plan (3,471) (3,209) Total employee compensation expense (55,561) (50,771) Other employment expenses (on-costs, recruitment and staff training) (2,431) (2,643) Total employment expenses (57,992) (53,414)

Other operating expenses Professional fees (2,061) (3,133) Communication (303) (443) Compliance (2,402) (2,451) Insurance (2,194) (1,434) Travel – (1,283) Non-recoverable GST (228) (238) Service provider fees (892) (640) Other expenses (699) (1,247) Total other operating expenses (8,779) (10,869)

Note 4. Income Taxes Income tax expense is the tax payable on the current period’s taxable income adjusted for changes in deferred income tax. Changes in deferred tax assets and liabilities are due to temporary timing differences and unused tax losses.

Current income tax is based on tax laws enacted or substantively enacted in each jurisdiction of the Group’s operations at the end of the reporting period. If required, provisions are established for the amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method at the tax rates expected to apply when the assets are recovered or the liabilities are settled. Deferred tax assets and liabilities arise on temporary differences between the tax bases of assets and liabilities and their carrying amounts. In addition, deferred tax assets may be recognised due to unused tax losses. Amounts are only recognised to the extent it is probable future taxable amounts will be available to use those temporary differences or tax losses.

Deferred tax assets and liabilities are offset when: • There is a legally enforceable right to offset current tax assets and liabilities; and • The deferred tax balances relate to the same taxation authority.

Current tax assets and liabilities are offset when: • There is a legally enforceable right to offset; and • There is an intention to settle on a net basis.

Current and deferred taxes attributable to amounts recognised directly in equity are also recognised directly in equity.

80 Annual Report 2021 | OFX Group Limited Notes to the Financial Statements

Where there is uncertainty over income tax treatments the recognition and measurement of current or deferred tax assets or liabilities is determined applying Interpretation 23 – Uncertainty Over Income Tax Treatments. The Group believes its accruals for tax liabilities are adequate for all open tax years based on its assessment, including interpretations of income tax treatments and prior experience.

Tax consolidation The tax consolidation legislation was adopted by the Group as of 15 October 2013. As a consequence, OzForex Limited and its wholly owned Australian controlled entities are taxed as a single entity. The Group’s tax year end has been aligned to financial year end as of 31 March 2021, changed from 30 September.

Offshore Banking Unit OzForex Limited, a subsidiary of the Group, was declared an Offshore Banking Unit (OBU) on 10 October 2015. In accordance with Australian income tax legislation, assessable offshore banking (OB) income derived by the OBU is taxable at a concessional rate of 10%. OB income includes revenue earned on foreign exchange transactions with offshore counterparties, excluding those with any AUD component. In March 2021 the Australian Treasurer proposed amendments to the Offshore Banking Unit regime. The proposed bill includes removal of the concessional tax treatment for OBU (i.e. 10% tax rate). This will cease to apply from the 2023-24 income year. Over the transition period the Government intends to put alternative measures in place to ensure activity remains in Australia once the grandfathering period ends. The bill is yet to become law. The Group structure will be reassessed to ensure it remains optimal and tax effective. a. Income tax expense

2021 2020 $’000 $’000 Current tax expense 1,279 5,756 Adjustments to current tax of prior years (260) (318) Total current tax expense 1,019 5,438 Deferred income tax (benefit)/expense 2,529 (1,002) Total income tax expense 3,548 4,436 b. Reconciliation of income tax expense to prima facie tax payable

Net profit before income tax 16,329 24,767 Prima facie income tax expense at 30% (2020: 30%) 4,899 7,430 Effect of different offshore tax rates (669) (456) Decrease in tax expense as a result of operating as an OBU in the current period (717) (1,285) Entertainment 6 19 Research and Development tax credits (678) (284) Research and Development tax credits associated with change of income tax year (443) – Share based expenses 384 82 Other items 766 (1,070) Total income tax expense 3,548 4,436

Annual Report 2021 | OFX Group Limited 81 Notes to the Financial Statements

Note 5. Deferred Income Tax Assets/(Liabilities)

2021 2020 $’000 $’000 Deferred income tax assets The balance comprises temporary differences attributable to: Provisions and accrued expenses 1,305 1,355 Corporate action costs deemed capital for taxation 530 728 Carried forward tax losses 40 104 Lease liabilities 3,078 3,513 Unrealised foreign exchange loss – 824 Property, plant and equipment 30 30 Other 79 42 Total deferred income tax assets – before offset 5,062 6,596 Offset deferred income tax liabilities (refer to Note 4 for accounting policy) (5,062) (4,497) Net deferred income tax assets – after offset – 2,099

Deferred income tax liabilities The balance comprises temporary differences attributable to: Intangible assets (2,231) (1,212) Financial instruments (1,712) (386) Right-of-use assets (2,324) (2,834) Property, plant and equipment (34) (65) Total deferred income tax liabilities – before offset (6,301) (4,497) Offset deferred income tax assets (refer to Note 4 for accounting policy) 5,062 4,497 Net deferred income tax liabilities – after offset (1,239) –

Net deferred income tax (liabilities)/assets (1,239) 2,099

82 Annual Report 2021 | OFX Group Limited Notes to the Financial Statements

Note 6. Earnings per Share

Earnings per Share Basic earnings per share shows the profit attributable to each ordinary share. It is calculated as the net profit attributable to ordinary shareholders divided by the weighted average number of ordinary shares in each year.

Diluted earnings per share shows the profit attributable to each ordinary share if all the dilutive potential ordinary shares had been ordinary shares.

There are no discontinued operations of the Group.

2021 2020 a. Earnings per share Cents Cents Basic 5.25 8.37 Diluted 5.10 8.16

b. Earnings $’000 $’000 Net profit attributable to ordinary shareholders used to calculate basic and diluted 12,781 20,331 earnings per share

c. Weighted average number of shares Number Number Weighted average number of ordinary shares used to calculate basic earnings per 243,674,227 242,768,161 share Dilutive potential ordinary shares1 7,151,139 6,351,304

Weighted average number of ordinary shares used as the denominator in calculating 250,825,366 249,119,465 diluted earnings per share

1. Includes issuances under the Executive Share Plan (ESP) and Global Equity Plan (GEP). Refer to Note 22.

Financial Assets and Liabilities

Note 7. Cash and Cash Equivalents, Client Liabilities, and Deposits Due from Financial Institutions Cash and cash equivalents includes cash on hand and deposits held at short call with financial institutions with an original maturity of less than three months (together, ‘cash held for own use’) and cash held for subsequent settlement of client liabilities.

Cash held for subsequent settlement of client liabilities represents transactions in progress where amounts have been received by the Group but the corresponding payment has not yet occurred. They are unsecured and short‑term in nature and are recognised initially at their fair value. Client liabilities are initially measured at amortised cost using the effective interest method and are shown in cash net of client receivables which are recognised in other receivables (refer to Note 8). Gross client liabilities total $247,094,000 as at 31 March 2021 (2020: $211,908,000).

Deposits due from financial institutions are primarily short-term deposits with an original maturity of greater than three months, but less than 12 months, are accounted for at the gross value of the outstanding balance and are held at amortised cost.

Annual Report 2021 | OFX Group Limited 83 Notes to the Financial Statements

2021 2020 $’000 $’000 Cash held for own use 33,454 28,771 Cash held for settlement of client liabilities 241,807 207,038 Cash and cash equivalents 275,261 235,809

Deposits due from financial institutions 27,119 32,276 Cash held for subsequent settlement of client liabilities (241,807) (207,038) Net cash held 60,573 61,047 Collateral and bank guarantees (23,756) (36,547) Net available cash 36,817 24,500

Note 8. Other Receivables (Current Assets) Other receivables include client receivables, GST receivables and other debtors. Other debtors include rental deposits and interest receivable. Client receivables include amounts settled on behalf of customers of the Group, which are yet to be received. All receivables are recognised at amortised cost, less any impairment. Details about the Group’s impairment policies and the calculation of the expected credit loss allowance are provided in Note 11(c). Interest is recognised in the Statement of Comprehensive Income using the effective interest method.

2021 2020 $’000 $’000 Client receivables 5,287 4,870 Provision for impairment (1,685) (1,588) GST receivables 154 486 Other debtors 1,281 3,303 Other receivables 5,037 7,071

Note 9. Derivative Financial Instruments Derivative instruments entered into by the Group include forward foreign exchange contracts. They are principally used to offset foreign currency contracts with clients and as hedges over the Group’s net investment in foreign operations.

Derivatives are recognised at trade date and are initially and subsequently measured at fair value. Movements in the carrying amounts of derivatives are recognised in net fee and trading income within the Consolidated Statement of Comprehensive Income except for movements in derivatives used in the Group’s hedge of net investments in foreign operations, which are recognised and measured in accordance with Note 11.

2021 2020 $’000 $’000 Value of forward contracts – assets 22,546 35,094 Value of forward contracts – liabilities (16,733) (32,656) Net financial instruments at fair value 5,813 2,438

84 Annual Report 2021 | OFX Group Limited Notes to the Financial Statements

Note 10. Fair Values of Financial Assets and Liabilities OFX Group has categorised its financial instruments that are either measured in the Statement of Financial Position at fair value or of which the fair value is disclosed, into a three-level hierarchy based on the priority of the inputs to the valuation.

A financial instrument’s categorisation within the valuation hierarchy is based on the lowest level input that is significant to the fair value measurement. Cash and cash equivalents, deposits due from financial institutions, other receivables, client liabilities, other creditors and accruals are excluded from the fair value hierarchy as these instruments are held at amortised cost. Their fair value approximates the carrying value as they are short-term in nature.

Level Instruments Valuation process Level 1 None – the Group does Not applicable. Traded in active markets and fair value is based on not hold any of these recent unadjusted quoted prices. instruments.

Level 2 Over-the-counter Forward foreign exchange contract Not actively traded and fair value is based on derivatives. valuations are based on observable valuation techniques which maximise the use of spot exchange rates and the yield observable market prices. curves of the respective currencies.

Level 3 None – the Group does Not applicable. Not actively traded and fair value is based on at not hold any of these least one input which is not observable in the instruments. market due to illiquidity or complexity.

Note 11. Financial Risk Management

Financial risk management The Group is exposed to the following risks, and manages these in the following ways:

Type of risk How the risk is managed Market risk – Market risk is comprised of both foreign currency risk and interest rate risk. Foreign currency risk – Arises from exposure to changes To manage the movement in foreign exchange rates, in foreign exchange rates between the time of agreeing the Group aggregates transactions and nets out buy rates with a client and either a corresponding hedge being transactions against sell transactions. taken out with a counterparty or an international payment The Group then enters into forward foreign exchange settlement. Settlement typically occurs between 12 to hedging contracts with counterparty banks once exposure 24 hours after the deal is entered or up to 24 months to a single currency reaches or exceeds a defined later for forward contracts with clients. threshold. The Group is also exposed to the interest rate risk embedded in forward contracts offered to its clients to lock in exchange rates up to 24 months in advance.

Interest rate risk – Exposure to non-traded interest rate Settlement of client liabilities between 12 and 24 hours risk results from cash and term deposits held in different of receipt of client cash results in low exposure to non- currencies. traded interest rate risk.

Annual Report 2021 | OFX Group Limited 85 Notes to the Financial Statements

Type of risk How the risk is managed Credit risk – The risk that creditors (clients and financial The Group typically does not pay out client deals until institutions) will not make payments on their receivables associated funds have been received. and derivatives respectively, when they fall due. In exceptional circumstances, senior management have the discretion to authorise same-day payments, which can result in funds being paid prior to clearance of customer funds. These transactions would only be approved for clients with a low risk of default and are pro-actively monitored to ensure timely settlement. For forward deals, part payments are required to be made by clients. Active monitoring of client balances ensures that adequate collateral is held. The Group sets credit limits and obtains collateral with well-rated banking counterparties as security (where appropriate).

Liquidity risk – The risk that the Group is unable to meet Regular forecasts of the Group’s liquidity requirements. the obligations of its financial liabilities when they are due. Surplus cash is maintained in highly liquid instruments. Continuous review of currency requirements in operating jurisdictions. Active maintenance of cash balances in currencies and geographical locations necessary to fund these requirements.

Risk is managed on a globally consolidated basis for the Group. Risks in subsidiaries are subject to the same risk acceptance policies as the Company. a. Market risk The main component of the Group’s market risk is exposure to foreign exchange rate fluctuations. The subsidiaries of the Group (Note 21) typically enter into transactions and recognise assets and liabilities that are denominated in their functional currency.

The Group’s sensitivity to foreign exchange fluctuations risk by major currency held on the Consolidated Statement of Financial Position is shown below:

31 March 2021 31 March 2020 +/-500 +/-500 +/-500 +/-500 Sensitivity Sensitivity Sensitivity Sensitivity of profit of equity of profit of equity Movement in exchange rate before tax after tax before tax after tax (basis points)1 $’000 $’000 $’000 $’000 CAD (36) (9) (27) (12) EUR 10 70 (1) (6) GBP (44) 63 (25) (11) NZD 12 11 (40) (41) SGD (2) 66 3 4 USD (102) (271) (41) (323) Other 37 42 80 79 Total (125) (28) (51) (310)

1. Impact of positive movement shown. The impact of a negative movement is the inverse.

86 Annual Report 2021 | OFX Group Limited Notes to the Financial Statements

b. Interest rate risk

The Group’s sensitivity to movements in interest rates is as follows.

31 March 2021 31 March 2020 +/-500 +/-500 +/-500 +/-500 Sensitivity Sensitivity Sensitivity Sensitivity of profit of equity of profit of equity Movement in exchange rate before tax after tax before tax after tax (basis points)1 $’000 $’000 $’000 $’000 AUD 482 362 552 414 CAD 48 36 30 23 EUR 186 148 101 78 GBP 229 180 135 102 NZD 39 29 42 31 SGD 88 73 19 15 USD 303 206 358 236 Other 137 105 103 77 Total 1,512 1,139 1,340 976

1. Impact of positive movement shown. The impact of a negative movement is the inverse. c. Credit risk Maximum exposure to credit risk and credit quality of financial assets The amounts shown represent the maximum exposure of the Group to credit risk at the end of the reporting period. This is equal to the carrying amount of each class of financial assets in the table below.

The Group uses internal credit ratings to manage the credit quality of its financial assets. The Group’s financial assets held with financial institutions are investment grade (between Aaa-Baa3). There are no balances that are past due or impaired as at 31 March 2021 (2020: nil).

2021 2020 Rating $’000 $’000 Cash and cash equivalents Investment grade 275,255 235,809 Deposits due from financial institutions Investment grade 27,119 32,276 Derivative assets – with financial institutions Investment grade 8,639 18,917 Derivative assets – with clients Unrated1 13,904 16,177 Other receivables Unrated1 5,037 8,659 Total gross credit risk 329,954 311,838

1. Unrated balances relate to amounts due from clients that are not graded by the Company or by a public ratings agency.

Annual Report 2021 | OFX Group Limited 87 Notes to the Financial Statements

2021 Credit Exposure ($’000) 2020 Credit Exposure ($’000)

$13,904 $16,177

$311,013 $5,037 $287,002 $6,553

Financial institution Customers Other receivables Financial institution Customers Other receivables

2021 Credit Exposure by Geography ($’000) 2020 Credit Exposure by Geography ($’000)

$73 $218

$67,556 $85,441

$121,250 $140,559

$102,305 $72,038

$38,770 $13,581

ANZ Asia Europe North America Other ANZ Asia Europe North America Other

Maximum exposure to credit risk and credit quality of financial assets (continued) For trading credit risk, the Group assesses the credit quality of the customer, taking into account its financial position, past experience, external credit agency reports and credit references. Individual customer risk limits are set based on internal approvals in accordance with delegated authority limits set by the Board. The compliance with credit limits by credit approved customers is regularly monitored by line credit management. Client receivables aged more than 90 days past due are fully provided for unless deemed otherwise appropriate based on expectation of recoverability.

The Group applies historical lifetime past due information to provide for expected credit losses prescribed by AASB 9, which permits the use of past due information to determine the lifetime expected loss provision for all client receivables arising from a financial instrument. The loss allowance provision as at 31 March 2021 and 2020 was determined as set out below, which incorporates past experience and forward-looking information about the client, including the likelihood of recovery.

More than More than More than 30 days 60 days 90 days Total Year Current past due past due past due $’000 Gross carrying amount ($’000) 2021 2,652 6 26 2,603 5,287 Gross carrying amount ($’000) 2020 3,320 33 42 1,475 4,870 Provision ($’000) 2021 60 – – 1,625 1,685 Provision ($’000) 2020 158 2 6 1,422 1,588

1. Expected loss rate for receivables more than 90 days past due incorporates the reduction attributable to amounts expected to be recouped from insurers.

88 Annual Report 2021 | OFX Group Limited Notes to the Financial Statements

The loss allowances for client receivables as at 31 March reconciles to the opening loss allowances as follows.

2021 2020 $’000 $’000 Opening loss allowance as at 1 April 1,588 544 Write off during the year (1,951) (3,331) Increase in loss allowance recognised in profit or loss during the year 2,048 4,375 Closing loss allowance at 31 March 1,685 1,588

Impairment losses on client receivables are presented as bad and doubtful debts within the Consolidated Statement of Comprehensive Income. d. Liquidity risk Maturity profile of obligations The table below summarises the maturity profile of the Group’s financial liabilities as at 31 March 2021 based on contractual undiscounted repayment cash flows. Derivatives are included in the less than three months column at their fair value, as they are frequently settled in the short term. Liquidity risk on these items is not managed on the basis of contractual maturity, since they are not held for settlement according to such maturity and will frequently be settled in the short term at fair value. Derivatives designated in a hedging relationship are included according to their contractual maturity.

On 3 months 3 to 12 1 to 5 Over 5 demand or less months years years Total $’000 $’000 $’000 $’000 $’000 $’000 2021 Other liabilities1 (2,220) (250,129) – (2,155) – (254,504) Lease liabilities (237) (474) (2,136) (14,455) – (17,302) Derivative financial instruments Inflows – 1,213,539 650,050 41,010 – 1,904,599 (Outflows) – (1,209,106) (649,105) (40,575) – (1,898,786) Total (2,457) (246,170) (1,191) (16,175) – (265,993)

2020 Other liabilities1 (2,152) (207,815) – (4,406) – (214,373) Lease liabilities (243) (486) (2,189) (18,225) – (21,143) Derivative financial instruments Inflows – 965,623 450,371 71,705 – 1,487,699 (Outflows) – (963,590) (450,089) (71,582) – (1,485,261) Total (2,395) (206,268) (1,907) (22,508) – (233,078)

1. Excludes items that are not financial instruments and non-contractual accruals and provisions.

Annual Report 2021 | OFX Group Limited 89 Notes to the Financial Statements

Financial instruments, derivatives and hedging activity The Group classifies its financial assets in the following categories: financial assets at amortised cost and financial assets at fair value through profit or loss. The classification depends on the purpose for which the financial assets were acquired, which is determined at initial recognition based upon the business model of the Group. i. Financial assets at amortised cost The Group classifies its financial assets at amortised cost if the asset is held with the objective of collecting contractual cash flows and the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest. These include client receivables and bank term deposits. Bank term deposits are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are financial assets at amortised cost. Refer to Note 8 for details relating to client receivables. ii. Financial assets and liabilities through profit or loss The Group holds forward foreign exchange contracts within a business model where collecting contractual cash flows while holding the asset is incidental to achieving the business model’s objective of managing performance on a fair value basis as determined by prevailing and expected foreign currency exchange rates. The Group is primarily focused on fair value information to assess the assets’ performance and make decisions, resulting in derivative financial instruments being measured at fair value through profit or loss unless designated in hedging relationships. iii. Hedging activity Financial instruments designated by the Group for the purpose of managing foreign currency risk associated with its net investment in foreign operations qualify for hedge accounting. Instruments are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. The full fair value of hedging derivatives is classified as an asset or liability.

At inception of the hedge relationship, the Group documents the economic relationship between hedging instruments and hedged items including whether changes in the cash flows of the hedging instruments are expected to offset changes in the cash flows of hedged items. The Group documents its risk management objective and strategy for undertaking its hedge transactions.

Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in other comprehensive income and accumulated in reserves in equity. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss within unrealised gains/(losses).

Gains and losses accumulated in equity are reclassified to profit or loss when the foreign operation is partially disposed of or sold.

90 Annual Report 2021 | OFX Group Limited Notes to the Financial Statements

The effects of applying hedge accounting on the Group’s financial position and performance are as follows:

2021 2020 $’000 $’000 Hedging instrument – forward foreign exchange contracts Carrying amount 3,923 (2,886) Notional amount British Pounds 3,646 2,681 Notional amount US Dollars 8,486 7,390 Notional amount Canadian Dollars 2,199 1,337 Notional amount New Zealand Dollars 2,462 1,775 Notional amount Hong Kong Dollars 30,000 30,000 Notional amount Euros 390 – Maturity date Apr 2020 – Mar 2022 Apr 2019 – Mar 2021 Hedge ratio 1:1 1:1 Change in value of outstanding hedge instruments since 1 April 3,923 (2,886) Change in value of hedged item used to determine hedge effectiveness (3,923) 2,886 Weighted average hedge rate – British Pounds A$1 : GBP0.5521 A$1 : GBP0.5101 – US Dollars A$1 : US$0.7279 A$1 : US$0.6667 – Canadian Dollars A$1 : CA$0.9611 A$1 : CA$0.8709 – New Zealand Dollars A$1 : NZ$1.0846 A$1 : NZ$1.0537 – Hong Kong Dollars A$1 : HK$5.9190 A$1 : HK$4.7596 – Euros A$1 : EUR0.6213 –

Annual Report 2021 | OFX Group Limited 91 Notes to the Financial Statements

Other Assets and Liabilities

Note 12. Property, Plant and Equipment Property, plant and equipment is measured at cost less accumulated depreciation and impairment losses.

Assets are depreciated on a straight-line basis over their estimated useful lives, as follows:

Asset class Useful life Furniture and fittings 5 to 10 years Leasehold improvements Up to 5 years Computer equipment 3 years

Furniture, fittings and leasehold Computer improvements equipment Total $’000 $’000 $’000 Year ended 31 March 2020 Cost 8,682 4,511 13,193 Less accumulated depreciation (7,030) (3,884) (10,914) Net carrying amount 1,652 627 2,279

Movement Balance at 31 March 2019 2,661 541 3,202 Additions 480 492 972 Disposals (21) (7) (28) Depreciation (1,468) (399) (1,867) Balance at 31 March 2020 1,652 627 2,279

Year ended 31 March 2021 Cost 8,554 4,787 13,341 Less accumulated depreciation (8,017) (4,270) (12,287) Net carrying amount 537 517 1,054

Movement Balance at 31 March 2020 1,652 627 2,279 Additions 12 276 288 Disposals (13) – (13) Depreciation (1,114) (386) (1,500) Balance at 31 March 2021 537 517 1,054

92 Annual Report 2021 | OFX Group Limited Notes to the Financial Statements

Note 13. Intangible Assets Intangibles are carried at cost at the date of acquisition less accumulated amortisation and impairment losses. Costs directly incurred in acquiring and developing certain software are capitalised where they meet the criteria for capitalisation and amortised on a straight-line basis over the estimated useful life of three to five years. Costs incurred on research related costs or software maintenance are expensed as incurred.

Internally Externally generated acquired software software Total $’000 $’000 $’000 Year ended 31 March 2020 Cost 14,393 15,845 30,238 Less accumulated amortisation (4,477) (10,256) (14,733) Less impairment (192) (481) (673) Net carrying amount 9,724 5,108 14,832

Movement Balance at 31 March 2019 7,958 3,061 11,019 Additions 5,246 4,063 9,309 Amortisation (3,288) (1,535) (4,823) Impairment (192) (481) (673) Balance at 31 March 2020 9,724 5,108 14,832

Year ended 31 March 2021 Cost 24,658 15,845 40,503 Less accumulated amortisation (10,531) (11,251) (21,782) Less impairment (192) (481) (673) Net carrying amount 13,935 4,113 18,048

Movement Balance at 31 March 2020 9,724 5,108 14,832 Additions 10,265 – 10,265 Amortisation (6,054) (995) (7,049) Balance at 31 March 2021 13,935 4,113 18,048

Note 14. Other Creditors and Accruals (Current Liabilities)

2021 2020 $’000 $’000 Accrued charges and sundry liabilities 4,255 6,186 Other liabilities 6 334 Total other liabilities 4,261 6,520

Annual Report 2021 | OFX Group Limited 93 Notes to the Financial Statements

Note 15. Provisions

Employee provisions The Group has a Short-Term Incentive Plan available to all employees including Executive Key Management Personnel (KMP). The Short-Term Incentive Plan is accrued as a liability and expensed over the annual service period until it is paid.

When the long service leave is not expected to be settled within 12 months of year end, the liabilities are measured as the present value of expected future payments using the projected unit credit method.

Leasehold makegood provision The Group holds a provision for makegood costs anticipated to be incurred in respect of office leases in Australia, London, Canada and Hong Kong. The provision is being accrued on a straight-line basis over the lease terms.

Employee provisions Long Annual Short-term service Leasehold leave incentives leave makegood Total $’000s $’000s $’000s $’000s $’000s Carrying amount at beginning of the period 1,971 2,610 491 544 5,616 Additional provisions made 3,308 2,712 262 1 6,283 Release of provisions (3,408) (2,399) – (33) (5,841) Carrying amount at the end of the period 1,872 2,923 752 512 6,059

All employee provisions are current liabilities apart from $404,429 (2020: $305,390) of long service leave which is non-current.

Note 16. Leases

Under AASB 16, leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis.

The Group leases various offices. Rental contracts are typically made for fixed periods of three to 10 years but may have extension options. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments: • Fixed payments (including in-substance fixed payments), less any lease incentives receivable; and • Variable lease payments that are based on an index or a rate.

94 Annual Report 2021 | OFX Group Limited Notes to the Financial Statements

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions. To determine the incremental borrowing rate and in the absence of third party borrowings, the Group uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by the Group, and makes adjustments specific to the lease, e.g. term, country, currency and security.

Extension options are included in a number of the Group’s property leases. The extensions are exercisable only by the Group and not by the respective lessor. In determining the lease term, which forms part of the initial measurement of the right-of-use asset and lease liability, management considers all facts and circumstances that create an economic incentive to exercise an extension option. Extension options are only included in the lease term if the lease is reasonably certain to be extended.

Right-of-use assets are measured at cost comprising the following: • the amount of the initial measurement of lease liability; • any lease payments made at or before the commencement date less any lease incentives received; • any initial direct costs; and • restoration costs.

Subsequent to initial measurement, the lease liability is reduced for payments made and increased for interest incurred. The liability is remeasured to reflect any reassessment or modification, or if there are changes to in- substance fixed payments. When the lease liability is remeasured, a corresponding adjustment is made to the value of the right-of-use asset. Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis.

Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment and small items of office furniture.

The Consolidated Statement of Financial Position shows the following amounts relating to leases:

2021 2020 Right of use assets $’000 $’000 Buildings 13,899 17,211 Total lease assets 13,899 17,211

Lease liabilities Current 2,848 2,918 Non-current 14,455 18,225 Total lease liabilities 17,302 21,143

Amounts recognised in the Statement of Comprehensive Income:

2021 2020 Depreciation charge of right-of-use assets $’000 $’000 Buildings 3,196 3,158 Total depreciation charge 3,196 3,158

Interest expense 1,359 1,647

Annual Report 2021 | OFX Group Limited 95 Notes to the Financial Statements

Capital Structure

Note 17. Capital Management The Group’s capital management strategy is to maximise shareholder value by optimising the level and use of capital, defined as share capital plus reserves. The Group’s capital management objectives are to: • Support the Group’s business and operational requirements; • Meet externally imposed capital requirements; and • Safeguard the Group’s ability to continue as a going concern.

The Group has continued to meet its internal and externally imposed capital requirements this year and no breaches have occurred.

Note 18. Ordinary Share Capital Ordinary shares are classified as equity and measured based on the proceeds from issuing the shares less the directly attributable incremental costs, net of tax.

There are 243,872,167 fully paid ordinary shares (2020: 242,957,636). Ordinary shares entitle the holder to vote and to receive dividends and the proceeds of the Company if it is liquidated in proportion to the number of shares held.

There are 5,775,021 (2020: 5,775,021) restricted ordinary shares issued to KMP in connection with the LTI – Executive Share Plan. Refer to Note 22 for further information.

Note 19. Dividends Dividends are recognised as a liability and a reduction to retained earnings when declared. The interim dividend paid was not franked. (2020: 70%).

2021 2020 $’000 $’000 Final dividend from the preceding year $0.0235 (2020: $0.0328) per share) (5,797) (8,219) Interim dividend $0.0081 (2020: $0.0235) per share) (1,993) (5,765) Total dividends recognised and paid (7,790) (13,984)

On 18 May 2021, the Company announced an on-market share buyback program to replace the dividend in the near term. The on-market share buyback program will be up to 10% of the Company’s fully paid ordinary shares and will commence 7 June 2021.

2021 2020 $’000 $’000 Franked dividends Franking credits available for subsequent financial years based on a tax rate of 30% 2,975 1,472 (2020: 30%)

The above amounts represent the balance of the franking account as at the end of the financial period, adjusted for the franking credits that will arise from paying the current tax liability, but before taking account of the final declared dividend for 2021.

96 Annual Report 2021 | OFX Group Limited Notes to the Financial Statements

Other Items

Note 20. Events Occurring After Balance Sheet Date Refer to the share buy back disclosed in Note 19. We are delighted to announce we have agreed terms for a strategic investment in TreasurUp, a European treasury management software company, that will allow us to provide automated hedging and risk management solutions for small and medium size corporates to manage their F/X risk. OFX have agreed terms to invest in a minority stake in TreasurUp. The Company’s investment is expected to comprise €3.15 million in preference shares and €0.75 million in convertible debt, with projected close in 1H22.

Note 21. Related Party Information

Subsidiaries The following entities are wholly owned subsidiaries of the Group and all have a 31 March year end:

Entity Country of incorporation Functional currency CanadianForex Limited Canada CAD

OzForex (HK) Limited Hong Kong HKD

OFX (Shanghai) Co. Ltd China CNY

OzForex Limited Australia AUD

OFX Australia Pty Limited Australia AUD

OFX Group Pty Limited Australia AUD

OFX (SNG) PTE. Limited Singapore SGD

NZForex Limited New Zealand NZD

UKForex Limited United Kingdom GBP

OFX Payments Ireland Limited Ireland EUR

USForex Incorporated United States USD

Note 22. Share Based Payments The Group has a number of employee share based payments issued under the Executive Share Plan (ESP) and the Global Equity Plan (GEP). The nature of the issuances under the Plans are listed below:

Issuance Description Long-Term Long-Term Incentives (LTI) are issued under the Group’s Executive Share Plan (ESP). Incentives (LTI) Executives are provided with an interest free, non-recourse loan from the Group for the sole – Executive Share purpose of acquiring shares in the Company. Executives may not deal with the shares while Plan the loan remains outstanding and any dividends paid on the shares are applied (on an after- tax basis) towards repaying the loan. Executives are entitled to exercise the voting rights attached to the shares from the date of allocation. If the Executive leaves the Group within the vesting period the shares allocated are returned to the Group, subject to discretion retained by the Directors.

Long-Term Long-Term Incentives (LTI) are issued to non-Australian employees under the Global Equity Plan Incentives (LTI) – with the same terms as above issuances. Global Equity Plan Options

Annual Report 2021 | OFX Group Limited 97 Notes to the Financial Statements

Issuance Description Short-Term Short-Term Incentive (STI) – Performance rights are issued under the Group’s Global Equity Plan Incentives (STI) (GEP). Performance rights are issued to employees eligible to receive deferred STI awards and – Performance rights also to eligible employees as reward for performance. Performance rights are granted at no cost and are settled in shares on a one-for-one basis.

Short-Term Retention payments in the form of an equity grant were issued to Executives as a one-off Incentives (STI) – incentive. This issuance represented a commitment made by the Board as a part of the Retention unsolicited M&A proposal during FY20. This award vests 12 months from the date of the award.

Employee Shares Employee shares are issued under the Group’s Global Equity Plan. The Board has discretion to gift shares to Employees and/or to offer a matching plan. Shares, where issued, are held in a holding lock and not traded for the earlier of, three years or when the employee ceases employment.

For details on the vesting conditions of share issuances, refer to the Remuneration Report.

The share based payment expense within Employee Expenses in the Consolidated Statement of Comprehensive Income is as follows:

2021 2020 $ $ Long-Term Incentives (LTI) 100,838 204,957 Short-Term Incentives (STI) – Performance Rights 549,699 60,201 Short-Term Incentives (STI) – Retention 686,522 – Employee Shares 215,850 6,158 Total share based payment expense 1,552,909 271,316

Accounting for share based payments The fair value determined at the grant date of the award is recognised as a share based payment expense in the Consolidated Statement of Comprehensive Income with an offsetting increase in share based payments reserve within Equity over the relevant performance period. The expense recognised is reduced to take account of the expense attributable to participating employees who do not remain in the employment of the Group throughout the vesting period.

Shares issued under the LTI – ESP are accounted for as options and as such the amounts receivable from employees in relation to these loans are not recognised in the financial statements. Settlement of share loans upon vesting is recognised as contributed equity.

The options are measured at fair value at the date of grant using the Monte Carlo simulation model. The fair values include assumptions in the following areas: risk free rate, volatility, estimated service periods and expected achievement of hurdles. The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily reflect the actual outcome.

Long-Term Incentives (LTI) – Executive Share Plan The ESP was established to incentivise Executives to deliver on the business strategy and contribute to sustainable long-term returns. Detailed remuneration disclosures are provided in the Remuneration Report section of the Directors’ Report.

Under the ESP, eligible Executives are provided with an interest free, non-recourse loan from the Group for the sole purpose of acquiring shares in the Company. Executives may not deal with the shares while the loan remains outstanding and any dividends paid on the shares are applied (on an after-tax basis) towards repaying the loan. Executives are entitled to exercise the voting rights attached to the shares from the date of allocation. If the Executive leaves the Group within the vesting period the shares allocated are returned to the Group, subject to discretion retained by the Directors.

98 Annual Report 2021 | OFX Group Limited Notes to the Financial Statements

For the FY21 share based loans the Board has implemented a minimum performance below which no benefit accrues, being where the minimum absolute TSR and minimum EBITDA level of performance is met. There is a target measure being absolute TSR (Total Shareholder Return). There is a set performance matrix that determines loan forgiveness.

The assumptions underlying the LTI – Executive Share Plan Options valuations issued during the year are outlined in the table below.

Fair value Risk free Share Performance Grant Vesting Exercise at grant Dividend interest price period (years) date date price date yield rate volatility 3 9 June 2020 9 June 2023 $1.37 $0.27 3.88% 0.28% 38.04%

Short-Term Incentives (STI) – Performance Rights

The fair value of the STI is determined using the Black-Scholes option pricing model with the following assumptions:

Deferral Fair value Risk free Share period Grant Grant Vesting Exercise at grant Dividend interest price (years) Type date date price date yield rate volatility 1 Retention 9 June 2020 9 June 2021 – $1.32 3.88% 0.28% 45.63% 2 Performance 9 June 2020 9 June 2022 – $1.27 3.88% 0.28% 42.09% rights 2 Performance 1 September 1 September – $1.07 4.87% 0.28% 41.52% Rights 2020 2022

Share based payment awards

Balance Granted Exercised Forfeited Balance at start of during during during at end of the year the year the year the year the year LTI – Executive Share Plan Options 6,176,087 2,550,185 – (2,810,359) 5,915,913 LTI – Global Equity Plan Options – 722,612 – – 722,612 Short-Term Incentives (STI) – Retention – 803,980 – (160,796) 643,184 Short-Term Incentives (STI) – Performance Rights 540,537 569,824 (518,799) (31,161) 560,401

Annual Report 2021 | OFX Group Limited 99 Notes to the Financial Statements

Note 23. Key Management Personnel (KMP) In accordance with the requirements of AASB 124 Related Party Disclosures, the KMP include Non-Executive Directors and members of the Group Executive Team who have authority and responsibility for planning, directing and controlling the activities of the Group. A summary of KMP compensation is set out in the table below.

Key management personnel remuneration

2021 20201 Remuneration $ $ Short-term employee benefits 2,401,432 2,452,202 Post-employment benefits 128,410 126,855 Long-term employee benefits 24,222 9,206 Share based payments 572,110 399,911 Total remuneration paid to key management personnel 3,126,174 2,988,174

1 FY20 SBP expense has been restated and increased by $81,479 due to revisions in the valuation methodology and to certain assumptions applied.

Detailed remuneration disclosures of individual KMP are provided in the Remuneration Report.

Shareholdings The total number of shares in the Company held during the year by the Directors and other KMP, including their personal related parties, are set out below.

2021 2020 Number Number Number of rights for fully paid ordinary shares 465,328 186,331 Number of fully paid ordinary shares 813,908 632,209 Number of LTI shares and shares subject to holding lock 3,784,703 4,500,448

Outstanding loans The total loan amount outstanding from KMP in relation to the LTI – ESP is $5,453,818. Refer to Note 22 for details of the plan.

Other transactions with KMPs All transactions with KMPs are made on normal commercial terms and conditions and in the ordinary course of business. There were no transactions during the financial year nor balances owing to or from KMP as at 31 March 2021.

In the normal course of business, the Group occasionally enters into transactions with seven various entities that have Directors in common with the Group. Transactions with these entities are made on commercial arm’s length terms and conditions. The relevant Directors do not participate in any decisions regarding these transactions.

100 Annual Report 2021 | OFX Group Limited Notes to the Financial Statements

Note 24. Auditor Remuneration

2021 2020 $ $ Company’s auditor remuneration1 KPMG Audit and review of financial statements 425,061 – Other professional services – regulatory review 70,984 – PricewaterhouseCoopers (PwC) Audit and review of financial statements – 417,000 Taxation services – 134,208 Other professional fees – 28,208

Total Company’s auditor remuneration 496,045 579,488

Auditor remuneration to other accounting firms Audit and review of financial statements 64,984 41,244 Taxation services 107,526 92,344 Total auditor remuneration to other accounting firms 172,510 133,588

1. In FY20 all amounts with respect to Company’s auditor remuneration were paid to member firms of PwC, being the Company’s auditor for the financial year, prior to appointment of KPMG as the Company’s auditor in FY21.

Note 25. Parent Entity Financial Information Dividends are recognised as income when the Company becomes entitled to the dividend.

The ultimate parent entity is OFX Group Limited.

2021 2020 Summary financial information $ ’000’s $ ’000’s Statement of Financial Position Investment in subsidiaries 30,966 29,412 Total assets 30,966 29,412

Share based payments reserve 1,976 638 Ordinary share capital 28,990 28,774 Total equity 30,966 29,412 Profit or loss for the year (intercompany dividends received) 7,792 13,984

Total comprehensive income 7,792 13,984

Earnings per share attributable to ordinary shareholders: Cents Cents Basic earnings per share 3.20 5.76 Diluted earnings per share 3.11 5.61

Annual Report 2021 | OFX Group Limited 101 Directors’ Declaration Directors’ Declaration

In the Directors’ opinion: a. the financial statements and notes for the year ended 31 March 2021 are in accordance with the Corporations Act 2001 (Cth), including; i. complying with Accounting Standards, the Corporations Regulations 2001 (Cth) and other mandatory professional reporting requirements, and ii. giving a true and fair view of the consolidated entity’s financial position as at 31 March 2021 and of its performance for the financial year ended on that date; b. there are reasonable grounds to believe that OFX Group Limited will be able to pay its debts as and when they become due and payable; and c. ‘About this Report’ on page 75 confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.

The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A of the Corporations Act 2001.

This declaration is made in accordance with a resolution of the Directors.

On behalf of the Board:

Steven Sargent Skander Malcolm Chairman Chief Executive Officer and Managing Director

18 May 2021

102 Annual Report 2021 | OFX Group Limited Independent Auditor’s Report Independent Auditor’s Report to the members of OFX Group Limited

kpmg

Independent Auditor’s Report

To the shareholders of OFX Group Limited

Report on the audit of the Financial Report

Opinion

We have audited the Financial Report of OFX The Financial Report comprises: Group Limited (the Company). • Consolidated Statement of Financial Position In our opinion, the accompanying Financial Report as at 31 March 2021; of the Company is in accordance with the • Consolidated Statement of Comprehensive Corporations Act 2001, including: Income, Consolidated Statement of Changes • giving a true and fair view of the Group’s in Equity, and Consolidated Statement of Cash financial position as at 31 March 2021 and of Flows for the year then ended; its financial performance for the year ended • Notes including a summary of significant on that date; and accounting policies; and • complying with Australian Accounting • Directors’ Declaration. Standards and the Corporations Regulations 2001. The Group consists of the Company and the entities it controlled at the year-end or from time to time during the financial year.

Basis for opinion

We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with the Code.

Key Audit Matters

The Key Audit Matters we identified are: Key Audit Matters are those matters that, in our • Recognition of fee and trading income professional judgement, were of most significance in our audit of the Financial Report of the current • Taxation period. • Share based payments These matters were addressed in the context of our audit of the Financial Report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

KPMG, an Australian partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Liability limited by a scheme The KPMG name and logo are trademarks used under license by approved under Professional the independent member firms of the KPMG global organization. Standards Legislation.

Annual Report 2021 | OFX Group Limited 103 Independent Auditor’s Report

kpmg

Recognition of fee and trading income ($134.2m)

Refer to Note 2 of the Financial Report

The key audit matter How the matter was addressed in our audit

Fee and trading income is considered a key audit • Assessed the appropriateness of the matter due to: accounting policy applied by the Group, against the requirements of the accounting • Its significance to OFX Group’s results; and standards. • The significant audit effort required • Obtained an understanding of the steps considering the high volume of transactions, involved in processing a trade and recording with unique margins on individual trades. revenue; We focused on fee and trading income generated • Tested controls over the reconciliations from: between the trade recording system and bank • Margins on foreign currency trades; and statements; • Changes in exchange rates between the time • Tested IT controls over the trade recording when a client trade is agreed, and a system; subsequent trade is entered into. • Tested IT controls over the feed of foreign exchange rates from external providers into the trade recording system; • Tested realised margin on the trades recorded by comparing the contracted rate noted in the trade recording system to market rates obtained from externally available published rates and recalculating the resulting margin; • Tested a sample of contract rates of customers in the trade recording system to underlying source documents, such as correspondence of trades with customers; • Compared a sample of trades to deal tickets and bank statements regarding the timing of their recording in the correct period; • Revalued a sample of foreign exchange contracts using external market rates to test unrealised gains and losses on contracts held by the Group at year end; • Assessed the disclosures in the financial report using our understanding obtained from our testing and against the requirements of the accounting standard.

104 Annual Report 2021 | OFX Group Limited Independent Auditor’s Report

kpmg

Taxation ($3.5m)

Refer to Note 4 of the financial report

The key audit matter How the matter was addressed in our audit

Tax is considered a key audit matter due to the Working with our tax specialists, we performed complexity of concessional tax arrangements used the following procedures: by the Group during the year, including: • Evaluated the Group’s Policy in relation to the • A subsidiary of the Group, OzForex Limited, allocation of trades to the OBU. We assessed qualifies as an Offshore Banking Unit (OBU), the OBU legal status against relevant which attracts a concessional tax rate of 10%. Australian tax legislation. We assessed the We focused on the application of OBU wording of the policy in particular as defined in conditions to the Group’s transactions. the Group’s notes as assessable offshore banking income derived by the OBU against • Eligibility for Research and Development Tax the criteria for OBU application of Credits (R&D Credits) which further reduces concessional arrangements in the tax the Group’s tax expense. The eligibility for legislation; these tax credits is determined by the Group based on relevant tax legislation. • Obtained a sample of trades recorded in the OBU and checked their features from the We involved our tax specialists to supplement our trade recording system against the allocation senior audit team members in assessing this key methodology within Group Policy; audit matter. • Assessed the scope, competence and objectivity of the external expert engaged by the Group to assist in determining the eligibility for R&D tax credits claimed under the relevant tax legislation; • Assessed the appropriateness of the accounting treatment applied to R&D Credits against the accounting standards; • Assessed the disclosures in the financial report using our understanding obtained from our testing and against the requirements of the accounting standard.

Annual Report 2021 | OFX Group Limited 105 Independent Auditor’s Report

kpmg

Share-based payments ($1.3m)

Refer to Note 22 of the financial report

The key audit matter How the matter was addressed in our audit

Share-based payments are considered a key audit Working with our share-based compensation matter due to the significant audit effort required specialists, we performed the following considering the nature of and changes to the procedures: Group’s share incentive programs. • Inquired of the Group and inspected a sample We focused on the: of share incentive programs to understand the remuneration process, structure and various • Valuation methodology and inputs, such as share incentive program offerings. the share price, vesting period, and grant date used by the Group in the valuation of share • Assessed the Group’s accounting policy for incentive rights; share incentive program arrangements against the criteria in the accounting standards. • Assumptions made by management when assessing the likelihood of share incentive • Assessed the valuation methodology against rights issuances vesting. industry practice and the requirements of the We involved our share-based compensation accounting standards. specialists to supplement our senior audit team members in assessing this key audit matter. • Checked key valuation inputs including determination of grant date, grant date share price, vesting period and vesting conditions against a sample of letters issued to employees, the Group’s share price, the underlying share incentive program conditions, and the requirements of the accounting standards. • Recalculated the grant date fair value for a sample of issuances using externally available valuation models and assumptions, comparing these fair values to those calculated by the Group. • Using our independent grant date fair values, calculated the expected share-based payment expense and compared it to that calculated by management. • Challenged the assumptions made by management when assessing the likelihood of issuances vesting using our knowledge of the Group, their past and expected future performance and our industry experience; • Assessed the Group’s disclosures of the key terms and valuation assumptions, as required by the accounting standards.

106 Annual Report 2021 | OFX Group Limited Independent Auditor’s Report

kpmg

Other Information

Other Information is financial and non-financial information in OFX Group Limited’s annual reporting which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for the Other Information. Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not express an audit opinion or any form of assurance conclusion thereon with the exception of the Remuneration Report and our related assurance opinion. In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report.

Responsibilities of the Directors for the Financial Report

The Directors are responsible for: • preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 • implementing necessary internal control to enable the preparation of a Financial Report that gives a true and fair view and is free from material misstatement, whether due to fraud or error • assessing the Group and Company’s ability to continue as a going concern and whether the use of the going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the Financial Report

Our objective is: • to obtain reasonable assurance about whether the Financial Report as a whole is free from material misstatement, whether due to fraud or error; and • to issue an Auditor’s Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the Financial Report. A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdfThis description forms part of our Auditor’s Report.

Annual Report 2021 | OFX Group Limited 107 Independent Auditor’s Report

kpmg

Report on the Remuneration Report

Opinion Directors’ responsibilities In our opinion, the Remuneration Report of OFX The Directors of the Company are responsible for Group Limited for the year ended 31 March 2021, the preparation and presentation of the complies with Section 300A of the Corporations Remuneration Report in accordance with Section Act 2001. 300A of the Corporations Act 2001. Emphasis of matter – Restatement of certain Our responsibilities comparative balances We have audited the Remuneration Report We draw attention to section 4 of the included in pages 49 to 69 of the Directors’ report Remuneration Report, which describes a for the year ended 31 March 2021. restatement of certain key management personnel Our responsibility is to express an opinion on the remuneration comparative period disclosures. Remuneration Report, based on our audit These restatements were due to revisions in the conducted in accordance with Australian Auditing valuation methodology and to certain assumptions Standards. applied in calculations of short-term incentive and

long-term incentive plans. Our opinion is not modified in respect of this matter. The Remuneration Report of OFX Group Limited for the year ended 31 March 2020 was audited by another auditor who issued an unmodified opinion on that Remuneration Report on 19 May 2020.

KPMG Shaun Kendrigan Partner Sydney 18 May 2021

108 Annual Report 2021 | OFX Group Limited Shareholder Information Shareholder Information

The shareholder information set out below is current as at 13 April 2021.

Corporate Governance Statement For FY21 the Company’s governance practices complied with the ASX Corporate Governance Council’s Principles and Recommendations. Further details are set out in the FY21 Corporate Governance Statement, as approved by the Board, which is available on the Company’s website at: https://www.ofx.com/en-au/investors/corporate- governance.

This Corporate Governance Statement outlines the extent to which the Company has followed the ASX Corporate Governance Council’s Recommendations during FY21.

Substantial Shareholders The number of securities held by substantial shareholders (holding not less than 5%) and their associates as shown in substantial shareholder notices received by the Company pursuant to Section 671B of the Corporations Act 2001 (Cth):

Number % of Issued Name Held Capital Selector Funds Management Limited 24,006,692 9.6% Ellerston Capital Limited 23,322,907 9.3% Microequities 20,006,760 8.0% Australian Ethical Investment 17,938,710 7.2% Pendal Group 15,822,151 6.3% Renaissance Smaller Companies 15,236,495 6.1%

Distribution of Security Holders

Total holders Number of of ordinary ordinary % of Issued Number of shares shares shares Capital 1 – 1,000 834 445,831 0.18% 1,001 – 5,000 1,349 4,054,761 1.66% 5,001 – 10,000 639 5,109,443 2.10% 10,001 – 100,000 838 22,987,189 9.43% 100,001 – 999,999,999 72 211,274,943 86.63% Total 243,872,167 100.00%

There were 352 holders of less than a marketable parcel of ordinary shares, based on the Company’s closing market price of $1.17 on 13 April 2021.

Unquoted Equity Securities Securities issued under the Company’s Global Equity Plan or Executive Share Plan are subject to vesting conditions which, if met, entitle the holder to ordinary fully paid shares in the Company.

Number held Number of holders Fully paid ordinary shares (unquoted) 5,775,021 11 Performance rights 860,362 43 Options 722,612 2

Annual Report 2021 | OFX Group Limited 109 Shareholder Information

Twenty Largest Security Holders of Ordinary Shares as at 13 April 2021 The table below includes ordinary shares issued under the Company’s Executive Share Plan.

Rank Name Units % of Units 1. Selector Funds Management 24,006,692 9.6% 2. Ellerston Capital 23,322,907 9.3% 3. Microequities 20,006,760 8.0% 4. Australian Ethical Investment 17,938,710 7.2% 5. Pendal Group 15,822,151 6.3% 6. Renaissance Smaller Companies 15,236,495 6.1% 7. Matthew Gilmour 12,552,548 5.0% 8. Castle Point Funds Management 10,889,008 4.4% 9. Harper Bernays 9,256,826 3.7% 10. Mr Gary Lord 9,100,000 3.6% 11. Dimensional Fund Advisors 6,259,589 2.5% 12. Vanguard Group 5,763,691 2.3% 13. Perennial Value Management 4,099,438 1.6% 14. Martin Currie Australia 3,880,500 1.6% 15. Solium Nominees 3,542,349 1.4% 16. Salter Brothers Asset Management 3,316,000 1.3% 17. Mr John A Malcolm 3,158,624 1.3% 18. Powerwrap 2,405,795 1.3% 19. Realindex Investments 2,087,246 0.8% 20. Eley Griffiths Group 2,044,683 0.8% Totals: Top 20 holders of fully paid ordinary shares 194,690,012 78.0% Total remaining holders balance 22.0%

Voting Rights

Ordinary fully paid shares The voting rights are governed by clause 37 of the Company’s Constitution which provides that every member present personally or by proxy, attorney or representative at a general meeting of the Company shall, on a show of hands have one vote, and on a poll shall have one vote for every share held.

Performance rights Performance right holders do not have any voting rights attached to the performance rights issued under the Company’s Global Equity Plan or legacy incentive plans.

Service rights There are no service rights holders.

Share options Option holders do not have any voting rights attaching to options.

Buyback On 18 May 2021, the Company announced an on-market share buyback of up to 10% of the Company’s fully paid ordinary shares during the 12 months commencing 7 June 2021.

Review of operations and activities A review of the Company’s operations and activities during the reporting period is available within the Directors’ Report.

110 Annual Report 2021 | OFX Group Limited Corporate Information Corporate Information

Directors Ms Connie Carnabuci Ms Cathy Kovacs Mr John (‘Skander’) Malcolm (Chief Executive Officer and Managing Director) Mr Grant Murdoch Mr Steven Sargent (Chairman) Mr Douglas Snedden

Company Secretary Ms Elisabeth Ellis

Annual General Meeting 26 August 2021

Registered Office and Level 19 Principal Place of Business 60 Margaret Street Sydney NSW 2000 Australia Ph: +61 2 8667 8000 Fax: +61 2 8667 8080 Email: [email protected]

Share Register Link Market Services Limited Level 12, 680 George Street Sydney NSW 2000 Australia Ph: 1300 554 474 Email: [email protected]

Auditor KPMG Tower Three International Towers Sydney 300 Barangaroo Avenue Sydney NSW 2000 Australia

Stock Exchange Listing OFX Group Limited shares are listed on the Australian Securities Exchange: OFX

Website www.ofx.com

Annual Report 2021 | OFX Group Limited 111 112 Annual Report 2021 | OFX Group Limited